Require Immediate Support? Free Director Helpline: 0800 644 6080

Real Business Rescue

Free Director Helpline: 0800 644 6080

What questions are asked in a company liquidation investigation?

Share:

Published:

How will directors be investigated after investigation?

When a limited company is liquidated the directors must undergo investigation by the appointed insolvency practitioner, or in the case of a compulsory liquidation ordered by the court, the Official Receiver (OR).

If your company needs to be liquidated, you may be concerned about the type of questions you’ll face. Initially, the liquidator will issue a questionnaire for you to complete, and this is usually followed by an in-person interview.

10,000+ Tests Completed

Free 60 Second Test

For Ltd Company Directors

 

What are you looking to do?
Choose below:

Why are company directors investigated following liquidation?

Company directors must fulfil certain legal obligations when in office. This protects the company’s creditors, and in some cases the wider public, from negligent or fraudulent conduct.

When a company enters liquidation it means there are insufficient funds to repay all creditors. Unfortunately, this typically results in unsecured creditors receiving very little or no return from the process.

This is why the liquidator must ask questions of the existing company directors, and also anyone who was a director during the previous three years. It helps to establish why the company failed, and identify whether any further action needs to be taken by the Insolvency Service.

“Shaun really helped me for quick legal advice in a stressful situation where I needed advice QUICK. Called me back within 30 seconds and gave me the advice I needed. Thank you”

Sam

 

Contact the Real Business Rescue Team today

What investigations take place during the insolvency process?

During formal insolvency, the administrator or liquidator will file a report with the Insolvency Service on director conduct. The elements of investigation at this stage may include:

  • Interviewing directors and other key officers of the company
  • Examining the company’s accounting records
  • Gathering evidence from stakeholders, including employees, accountants, and solicitors
  • If sufficient evidence indicates director misconduct, a report is sent to the Insolvency Service who decides whether or not to pursue the matter through the civil court, under the Company Directors Disqualification Act (CDDA).

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

Questions asked during a liquidation investigation

Questions asked by the liquidator are typically associated with the following areas:

Director’s Loan Account (DLA)

If your Director’s Loan Account was overdrawn at any time it means you’ve borrowed money from the company and failed to repay it. This could have created financial difficulties, and ultimately contributed to its decline - overdrawn DLAs are subject to specific rules and regulations when it comes to repayment.

Payments made on behalf of the company

The liquidator will scrutinise the company’s accounts for ‘questionable’ payments - paying one creditor in preference to others, for example, or selling business assets for less than their fair value. These are called antecedent transactions, and the liquidator can look back as far as two years before the insolvency if the transaction was to a connected party.

General business practices

You may be questioned about your general business practices, such as whether or not you take minutes at board meetings, and how much detail is recorded.

Dividend payments

Questions are commonly asked about dividend payments that have been made leading up to the insolvency. If there were insufficient distributable profits available to support any of the dividend payments they will be deemed illegal, and you could face accusations of misconduct.

Timeline of events following insolvency

The liquidator needs to establish that you’ve fulfilled your legal obligations to creditors, and ceased trading as soon as you were aware the company was insolvent. If you carried on trading and worsened creditor losses, however unintended, you could face disqualification.

In many cases a liquidation investigation is nothing to worry about, and is relatively straightforward. If misconduct or negligent/fraudulent activity is uncovered, however, you may be required to attend further interviews.

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

It’s imperative to seek advice from a licensed insolvency practitioner (IP) if your company experiences financial distress. This not only protects your creditors from avoidable financial loss, it also protects you and other company directors from potential personal liability.

For more information about company liquidation investigations, please get in touch with Real Business Rescue. We can offer you a free, same-day consultation, and work from an extensive network of offices around the country.

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.