What happens to me if the company goes into voluntary or compulsory liquidation?
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.
Can I be a director of the company in the future if this company goes into insolvency?
The answer is yes, you can be a director of as many companies as you wish. Make sure that the new company does not have a name alike that of the old company. And what you shouldn't do is 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 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 liquidators must collect that money or do a deal.
If decisions are taken by me that seem wrong what can happen in liquidation? The KEY TIP here is this - if the company is struggling financially keep notes and records of all main decisions and have regular board meetings at which minutes are taken (notes) and resolutions passed. BUT the main thing to do is to get advice early. If you want advice on this please call any one of our experts.
If I have provided personal guarantees will these be called in if the company goes into liquidation?
Yes probably is the answer. It is highly likely that if the company enters into liquidation, that if 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 liquidation?
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!
Worried about poor cashflow? Covid-19?, How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide was mostly written pre Covid-19 and there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.