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Directors Responsibility and Company Liquidation

Will acting as a director personally make you liable for your company’s debts?

If your company is insolvent and faces closure by liquidation. Directors start experiencing pressure over their liquidation responsibilities. 

Liquidating an insolvent company means all proceeds go to creditors. 

IMPORTANT: An insolvent company MUST cease trading immediately, OR the directors could be held personally responsible for any debts accrued during that period. Also, there may be a question of why the directors didn’t act reasonably or promptly. 

Why did they persist in building up debt, knowing your company would not pay their creditors?

Directors often remain concerned about their companies liquidation and their director’s loan account. The director’s loan account remains a debtor of the company. In liquidation, the liquidator collects debts owed to the company. Director loans owed to the company will be part of the collection. Once collected, the money is then distributed to the company’s creditors.

If your a director of an insolvent company, it is vital to stop trading IMMEDIATELY. Don’t take a director’s loan and cease purchasing on credit. Trading when insolvent risks wrongful trading.

Liquidations, either compulsory or voluntary, deal with the company’s debts before its dissolution. The directors’ responsibility is to ensure that the company sustains no further debts so that the prospect of paying creditors out of the liquidation does not diminish.

As a director of an insolvent company that goes into liquidation, directors often raise many questions about liability and responsibility for your company’s debts. The insolvency team at HBG Advisory can support you during this period and stop further grief.


Please seek robust professional help before it is too late. HBG Advisory will swiftly safeguard your company position, securing its creditors and you as a director from directors liabilities. Please call 0330 056 3120 today and start moving on.

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