Elected as Treasurer of Golf Club on 4 December - but having now seen the books I realise the club (company limited by guarantee) is insolvent as liabilities exceed assets. Advice urgently needed.

I would really appreciate any help or advice on this issue in advance of an EGM scheduled for next week.

 

I was elected as Treasurer on Sunday 4 December at the AGM after the  previous incumbent, who was proposed for re-election, stood down after 13 years when he realised I was standing against him which had never happened before during his tenure.

I have yet to carry out my full due diligence as am still waiting on (a) the November month end accounts and (b) the ex-Treasurer to come back to me on a number of queries I have left him (he is proving elusive and difficult).


But it is already obvious to me that the limited company is insolvent in the sense that liabilities exceed assets though we still have plenty of cash. There might be some creditors that could be released which could improve balance sheet solvency test but these will be quickly wiped out by further monthly losses. Given the above,  I am not planning to become a director of the company due to the solvency issue though I wish to serve as Treasurer and try and turn things around.


I feel duty bound to advise other board directors that they could be liable if they disadvantage creditors by to trading  unlawfully. This is still a technical matter in so far as we have sufficient cash to continue through any negotiations with our landlord athen await membership renewal season to assess our cash position. We would need our Landlord to accept that the fixed costs of the lease has grown exponentially over the last 20 years at a time when our membership has been in decline. We do not feel the Landlord has any alternative use for the property and could incur significant costs in care and maintenance should we fold.

I am concerned that the ex-Treasurer has not kept the board fully informed of the financial position and there are now board directors as well as the Treasurer exposed.


I have asked the ex-Treasurer several times to share with me his assessment of the finances used to assure him (and the board) the company was not insolvent and also a note all of his recent dealings with our Landlord so I understand what financial picture he has shared with our largest Creditor. He has provided me with nothing to date and there is nothing on file from what I can see. I have also asked him to provide me with a letter of assurance that the company was solvent when he retired as Treasurer and I was elected (the AGM date) and he has refused to provide anything either verbally or in writing.


All a bit of a mess and I am fully engaged on researching the finances and the lease provisions so that we can present a proposal to the members at the EGM on 21 December so any assistance on the legalities would be welcome.

I really would appreciate any thoughts or advice to progress this difficult situation.


Many thanks
David Walsh FCA