What happens to me if the company goes into administration?
The simple answer as a director of an insolvent company is that nothing will happen to you, if you have acted promptly and properly in the lead up to the insolvency process. The BUT(& it is a big but) is if you haven't acted properly then you may face personal issues in the future.
When administrators are appointed then the directors’ powers cease. They are still responsible for their previous actions though. Usually the administrators will either sell the business quickly or if they trade the company in administration they will make the directors redundant as employees. So you will be sent home
Can I be a director of the company in the future if this company goes into administration?
The answer is yes, you can be a director of as many companies as you wish. You may be part of a new company that is going to buy the business from the administrators. In which case you must get personal legal advice on conflicts of interest.
Make sure that the company name is acquired before re-using it. And it is obvious, what you shouldn't do is to act irresponsibly when acting as a director of the old company and then set up another company and do the same silly things again.
DID YOU KNOW? The law requires directors to keep up-to-date financial information and to understand the financial position of the company. Failure to do this may mean you face legal action by a future administrator or liquidator.
DID YOU KNOW? Taking cash out of the company as drawings (not dividends) will mean that you owe the company money. This is simply an asset called a debtor and the administrators or future liquidators must collect that money or do a deal.
If I have provided personal guarantees will these be called in if the company goes into administration?
Yes probably is the answer. It is highly likely that if the company enters into administration, that if it you have provided security for company debts in the form of a personal guarantee , then this may be called in. If you're in any doubt about this please call us now we can assist directors with personal guarantee problems.
Will I be disqualified as a Company director if our company goes into administration?
Again the answer is NO – if you acted properly, responsibly and quickly. If you don’t act quickly and responsibly when you knew that the company was in serious financial difficulty then YES you may be disqualified….. Take back control protect yourself by asking for expert free help now - call 0800 9700539
By failing to act and making creditors debts worse or running the company’s cash down to £0 to pay yourself, when other creditors are not being paid; or by taking company assets that do not belong to you, then you may face legal action by the future liquidator. But you really have to be very stupid to do that.
If you are thinking that the business will soon run out of cash then you must take advice now. Take back control and call us on (0800) 970 0539