Require Immediate Support? Free Director Helpline: 0800 644 6080

Real Business Rescue

Free Director Helpline: 0800 644 6080

Am I Still Liable For Business Debts After Resigning As Company Director?



Am I liable for company debts after resigning as director?

If you resign as the director of a limited company, you can still be held personally liable for business debts in certain instances. If you have personally guaranteed any company borrowing, such as a loan or lease agreement, this will remain valid even if you resign from your position as director. Therefore if the company becomes insolvent and is subsequently liquidated, the responsibility for repaying the personally guaranteed borrowing will fall to you even if you have already resigned.

If I resign as a director of a ltd company, am I still liable for business debts?

There are many reasons a director may want to resign from their post and move on from their company. This could be due to retirement, relocation, or simply a desire to move on to a new venture. Resigning is a surprisingly easy, and often very quick process, however, it goes without saying that you should give this decision careful thought and consideration before going ahead.

10,000+ Tests Completed

Free 60 Second Test

For Ltd Company Directors


What are you looking to do?
Choose below:

How do you resign as a director of a limited company?

Your first step is to put your intention to resign in writing and give a copy of this to the remaining directors. You do not have to give a reason for your resignation, however, you must make it clear that you are leaving the company along with the date this is to take effect from. Although not mandatory, you may also want to notify customers and/or suppliers of your decision and let them know their point of contact following your departure. Once your resignation has been accepted by your fellow directors, a TM01 form should be completed and sent to Companies House who will remove your name from the records they hold on the company.

At this point your liabilities are over as far as the company is concerned. You can only be held responsible for things that happened (or did not happen) during the time of your directorship. As long as you did not act outside of the law whilst in your post as director, you are free to walk away from the company for good.

“Called for help with closing non-trading companies and Chelsea advised me on what to do and instead of taking advantage as others would by taking on the case and charging loads. She gave me a solution that would cost £20. Very pleased with the service and thankful for Chelsea’s advice.”



Contact the Real Business Rescue Team today

Understanding limited liability

But what happens if the company is in debt at the point of your resignation, or if it falls into debt after you resign? In the majority of cases, the simple answer is: nothing! This is because of something which is known as ‘limited liability’, a feature which is often seen as one of the main benefits of operating under the structure of a limited company. Limited liability essentially means that the debts of the company belong to the company and not the directors personally. If the company is unable to meet its liabilities, it can enter into an insolvency procedure such as a Creditors’ Voluntary Liquidation (CVL) as a way of closing the company and clearing any outstanding debts. It should be noted that only current directors of the company are able to begin such a process; once you resign you will have no control over how the company is run and you will be unable to prevent, or initiate, a liquidation procedure.

UK’s number one for director advice

We handle more corporate insolvency appointments than any other UK firm; demonstrating our commitment to helping directors and business owners in financial distress.
The team are available now -  0800 644 6080

Get a Quote Find Your Nearest Office

Personal guarantees

While limited liability does offer a level of protection for the directors of limited companies, there are some exceptions to this. The main one is if you have signed a personal guarantee for a company loan, credit card, overdraft, or any other finance agreement. By signing a personal guarantee you are removing the protection limited liability offers. Any personally guaranteed debt is the responsibility of the individual who acted as guarantor until the money is paid back in full. This means that if the company is unable to keep up with the agreed repayments, the guarantor must step in and pay this money back using their personal funds. Resigning as director does not invalidate a personal guarantee.

You should therefore think very carefully before resigning from a company if you have personally guaranteed any of its debts. Once you resign, you no longer have any say on how the company is run and you will not be able to access its accounting details. Should the company take a downturn financially following your resignation, and is unable to keep up the repayments on its loans and other financial obligations there is nothing you can do to help the situation. In fact you may not even be aware of any issues until you receive a demand for your personally guaranteed loan.

Need to speak to someone?

If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need.
Call our team today on 0800 644 6080

What next?

If you are considering resigning from a company and would like some specialist advice, contact Real Business Rescue today. Our team of experts will be able to clarify your position and explain exactly what resigning will mean for you on a personal level. With 100+ offices from Inverness down to Exeter, Real Business Rescue can offer unparalleled director advice across the UK.

reviews io logo

Real Business Rescue are here to help

Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.

  • UK’s Largest Liquidators
  • 100+ Offices Nationwide
  • 100% Confidential Advice
  • Supported 25,000+ Directors
Meet The Team
Team Of 4

Team of Qualified Experts

Trusted team of experts on hand to assist

Meet The Team
Rbr Accreditations Blue

Looking for immediate support?

Complete the below to get in touch

Here at Real Business Rescue we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY
10,000+ Tests Completed

Free 60 Second Test

For Ltd Company Directors

What are you looking to do?
Choose below:

Real Business Rescue Recommended
  • UK's leading business funders
  • Free Brokerage Service
  • Full Market Access
  • Over 30 years' experience
  • Strong relationships with HMRC
  • Support from start to finish
  • 10,000 potential buyers
  • 12,000+ Businesses Sold
  • 60+ Years Experience
Next Steps

We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.