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Looking to liquidate your business? For help call 0300 303 8284
Looking to liquidate your business?
For help call 0300 303 8284

Company Liquidation & Directors Responsibilities

If your business is insolvent (liabilities exceeding assets, or unable to meet financial commitments) you have particular responsibilities as a director.

In certain cases, if you do not meet this regulation, you could be accused of wrongful trading, and in worse cases, become personally liable. Because of these regulations it is very important that if you believe your business is insolvent, that you seek professional advice from an Insolvency Practitioner such as The Insolvency Experts.

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For more information on the responsibilities of directors during insolvency, see below or call us on 0300 303 8284. You can also find out more information by contacting The Insolvency Experts online and we will get back to you with further details.

Personal Guarantees

If you have given one of your creditors a personal guarantee, you can not simply get out of them. The only way to remove a personal guarantee is by negotiating with the lender for them to remove it, negotiating on payment terms, paying it, or going bankrupt.

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Shadow Directors

Many people believe that only registered directors are held legally responsible for acting in the best interest of creditors, however, if you run the business and control the direction of it, giving instruction to the directors then this is referred to as “shadow directing”. If you are considered to be a shadow director you are subject to the same investigations and can be held as accountable as a registered director.

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Insolvent Trading

If your business is insolvent and it continues to trade, you may be at risk personally if you are found to have breached your duties as a director. If you have any concerns that you may be or are soon to be insolvent, you should seek our professional advice.

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Director's Loan Accounts

A directors’ loan account (DLA) is a notional balance owed between directors and the company. It is used to record money injected into and taken from a business by the directors.

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More information

What are my duties?

During insolvency, a director has certain responsibilities for the business. Where a business has liabilities exceeding assets, is unable to meet financial commitments or has significant pressure from creditors, there are certain regulations that a director must adhere to. If, as a director, you have not dutifully adhered you could be at risk of insolvent trading or become personally liable. It is imperative to the business that you seek professional advice on insolvency before the problem escalates. Contact The Insolvency Experts for advice, help and instruction on the best options for your business during insolvency.

Shadow Directors

If your business is entering administration or liquidation, it’s important to understand the significance of your role within the company. If you are not a registered director, but still instruct directors, run the business and control certain aspects of it, you could be a shadow director. As a shadow director, you are likely to be investigated in the same way as a registered director and could be held as accountable. For more information on shadow directors and understanding the role in administration or liquidation, contact The Insolvency Experts today for professional understanding and advice.

Insolvent Trading

Trading whilst insolvent can have serious impacts for directors. If a company becomes insolvent, it’s important trading ceases while necessary processes are put in place for the business. Failure to do so can result in a breach of the Insolvency Act 1986 which can lead to directors becoming personally liable for insolvent trading. To avoid these measures and to gain a better understanding of what should happen if a business becomes insolvent, contact The Insolvency Experts today and we can help turn your business around or start formal processes to close the business completely.

Personal Guarantees

A personal guarantee is granted by a director to a creditor to ensure debts are repaid. Personal guarantees are a legal arrangement and are difficult to remove. If the company defaults on the agreements made, creditors can chase you personally for debts owed. Other ways to remove personal guarantees include negotiating, finding the funds to repay the debts or declare bankruptcy. There is a formal process in place which gives a window of opportunity for a company to repay debts, however failure to do so can have serious implications. Contact The Insolvency Experts today for professional advice on personal guarantees and how to manage them effectively for your company.

Director's Loan Accounts

A Directors Loan Account (DLA) is a legal account owned by directors to move money freely in and out of a business. These work perfectly well for some companies, however there can be complications should a company become insolvent. If a DLA isn’t repaid by the end of the financial year, it could be regarded as an interest free loan from the business and if it is insolvent, it will become an asset that can be recovered by creditors. For advice on DLA’s, whether in credit or debit, speak to an Insolvency Practitioner at The Insolvency Experts today for professional financial advice on how to manage a DLA effectively.

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Director duties
michael beal