I am a timed-served bricklayer and in 2014 I set-up a limited company to do a job for a main contractor.

Once the limited company was set-up, I opened a trade account with a well-known chain of builders’ merchants. However, the trade account that I opened was not a business account but a personal account, and I used my own UTR number for tax purposes, although I did not provide a personal guarantee.

The merchant gave my account a £20,000.00 credit limit and I always paid on time for 8 months while the job was on going. I have now reached the end of the job and the main contractor is stalling on paying the final account. I currently owe approximately £16,500.00 to the merchant, but I have no way of paying this personally. The merchant has now closed my account and has issued a winding up order. The main contractor will pay but I don’t know when. I was wondering where I stand on paying back the merchant or will the company just fold and they will get nothing.

Any help on this would be great.

Mustafa, Blaby


Hello Mustafa. You certainly have a problem, and you will need to act as soon as possible.

There is some important information which I would need to know to be able to give you specific advice. For example, have you been issued with a winding up application or order? An order will be from the Court whilst an application will be made by the builder’s merchant to the Court for the winding up. Are the proceedings in the limited company name or your personal name?

From your outline of the matter, as the trade account is in your name I fully expect that the proceedings will be against you personally and you will be personally liable for the debt, not the limited company and hence, proceedings to secure the monies will be against you personally, not the limited company. I am however, bemused about your reference to a winding up order. Limited companies are subject to winding up orders whereas someone who has personal liability is subject to bankruptcy proceedings.

The builder’s merchant may have issued a statutory demand for the debt, and if you failed to pay the amount claimed or remained silent, then a petition would be issued for your bankruptcy. A bankruptcy petition is an application to the court for an individual’s assets to be taken and sold to pay the debt and it has nothing to do with the company.

If the proceedings are against your limited company, then the builder’s merchant would have issued a winding up petition against the limited company but if the application is successful, it is only the limited company that is affected, not you personally.

All that said, why are you not attempting the secure the monies owed from the main contractor, as surely this would solve all of the problems? You will need to look at your terms and conditions of contract in relation to payment, but the Housing Grants, Construction and Regeneration Act 1996, as amended by the Local Democracy, Economic Development and Construction Act 2009 requires all construction contracts to have an adequate payment mechanism and failing that, a payment mechanism will be implied into the contract.

Good luck.

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