Questions & Answers
Director's responsibility for rental cheques upon bankruptcy/liquidation
Good Day,
We are an LLC based in Fujairah. Due to COVID, we have run out of money and will need to declare bankruptcy or liquidate it. However, when all rental cheques were handed over, they were from my personal account (as we took a loan to start the business and did not have a bank account for the business yet).
These cheques are still in the possession of the lessor. It would be possible to replace the cheques but I will still need to personally sign each cheque, as I am the director of the LLC.
If we liquidate, would I be held responsible for the payment of the outstanding rent?
Can I end up in jail if I don't pay?
Is this not exactly why an LLC is established?
What will be my responsibilities as we are not getting cash into the business?
Hello,
As per your query, please note that as there is no company account, you should have replaced the cheques after the company account is opened.
Anyways, as the company is filing bankruptcy, the rental agreement does not get automatically terminated. It may be terminated by the trustee after subletting or the landlord may terminate the same or the rent may be payable through the sale proceeds of the assets.
However, the outstanding rent is payable. It is better to file for insolvency too and then liquidate the company.
Please contact us via phone or email for more information.
