Startups.ie

[selleri]

I have started companies in France, Uk, and Switzerland. I would like to start a new business and am looking at Ireland. Having had both successes and failures I know that one important thing for me is the issue of creditor protection (what happens when you owe people money and cannot pay) and bankruptcy. You do not start up a business planning to go bankrupt just as you do not get married planning to get divorced, but now, with some experience under my belt, I know these are realities and that you had better think carefully about them.

In Switzerland a creditor has to file a "Commandement de Payer" roughly translating as a command to pay. It can take 6-12 months for this to come before a court (unless you have recognised the debt owed in a formal communication and agreed to other terms for rapid recovery (sometimes the case with credit card company's contracts). This gives you breathing space and no one can seize your assets or get a court order to do so in the mean time. I understand in the UK getting a court order is far simpler and it seems this is also the case in Ireland. Could anyone give me more information on this point.

Again, in Switzerland, when your company in over-indebted, you have to announce it to a judge but the judge can then give you the possibility to restructure your company and keep creditors at bay. If you are not successful and file for bankruptcy, creditors have to prove that you committed fraud or some other breach of the law to be able to recuperate assets from you as a director. There is no liquidator appointed, but rather the bankruptcy is handled by the Swiss bankruptcy office. How is it in Ireland?

Also in The UK I remember having threats of fines every time a document was not filled in time (France is even worse for the amount of paperwork). Is there a lot of paper work for employees in Ireland?

Lastly what are the approximate social charges to be paid in Ireland.

Thanks in advance for any answers.

[Stephen]

Hi Selleri,

Interesting topic! indeed most people do not look at the worst case scenario when setting out as the majority of people are pretty sure that they will be the exception to the rule despite the much talked about '9 out of 10 new businesses fail' "stastic" that seems to have been around forever!

The main protection for individuals in Ireland was to form a limited liability company, basically the company is a stand alone entity, seperate to the directors. So technically the company owes the money not you. If the business failed oweing lots of money the debtors would have to pursue the company and seek to claim against any assets of the company. No assets? no money for the debtors!

Hence the dawn of the 'Personal Guarantee' basically a tool for removing the protection of a limited company. Many companies offering credit of any significant nature (including banks!) will now require a personal guarantee from a director/s basically as the name suggests guarenteeing payment of any debt due regardless of what happens. There is practicaly no defense in court to a personal guarantee. The general rule of thumb is 'never sign one!' the reality in Ireland in 2010 however is that if you are not prepared to sign a 'PG' then no dice. Suppliers and banks have been ravaged by bad debt recently and in the current climate nearly everyone is a credit risk.

On a more practical level however, the legal system is currently pretty jammed and legal costs are a joke. No company wants or needs the hastle and expense of dragging your sorry ass to court unless they are owed enough money to justify this action. Most suppliers would rather work things out through some sort of repayment plan and it is quite likely that if you do end up in court you could be hit with the other sides costs!.

In Ireland basically a company would get a judgement against you, they are then entitled to enforcre that judgement against your property etc.

If you are running a sizeable business and it is very apparent that the business has no chance of paying its debt you need to notify suppliers and take action otherwise you can be accused of reckless trading, there are other areas like examenership, recevership etc which I won't get into.

In broad terms, Ireland is pretty small, if you screw people over word travels pretty quickly, the law is an ass but it may catch up with you. If you do end up in diffuculty talk to everyone who is owed money all the time, keep the lines of communication open and work out a plan, the minute you start avoiding phone calls they start issuing solicitors letters.

I try to stick to my old school motto 'per vias rectas' - by straight roads.....

S