Updated: 17th November 2020
When a company comes under serious financial pressure or becomes insolvent, the directors involved will understandably want to know how the situation might affect them personally. Real Business Rescue experts can provide clear guidance on any issues around this subject and help directors act promptly to protect themselves under these circumstances. Watch the video below to find out more.
If you’re a director of a company in financial difficulties and you’re concerned about the implications for you personally, you should note that – generally speaking - company directors are not liable for the debts as the company itself is a separate legal entity.
You are generally not liable for debts owed to trade creditors or sums owed to a limited liability company in relation to which you have not provided a personal guarantee. However, if the company has corporation tax debts for example, HMRC could claim that as a director you had personal responsibility for making sure taxes were paid - but generally this is unusual and is only relevant in particular circumstances.
If your company is insolvent and is facing liquidation, you must be able to demonstrate that you have acted in the best interests of creditors as a whole. As part of the liquidation process, liquidators are required to conduct a thorough investigation of the company's affairs and the directors’ conduct. They will identify whether there are any claims that could be pursued for the benefit of creditors and whether the directors’ conduct should be reported to the Insolvency Service.
If you’re concerned about your personal liabilities and the implications that your company’s debts might have on you, contact us and we can arrange a free confidential consultation.