A company director’s moral and legal duty is to ensure they trade a solvent company.
At the first sign of insolvency, a company director will need to seek professional advice as early as possible.
If you need to place your company into liquidation, as long as no misconduct has occurred then there is no reason why you cannot take up this role again.
Insolvency and your role as a Company Director
As a Company Director you have many duties and responsibilities to fulfill on behalf of all your stakeholders: customers, trade and finance creditors, HMRC, employees and shareholders.
Your primary responsibility – and legal and moral duty – is to do everything within your powers to make sure that your business is a success, solvent and compliant with all of its statutory obligations. This includes protecting creditor interests at all times.
What happens if your company gets into debt difficulties?
If your company gets into financial difficulty you may need to call on a whole new set of skills and expertise. You might also be unsure about exactly what your responsibilities and duties are if you’re struggling with debt or what your options are for dealing with it.
Our Licensed Insolvency Practitioners at FA Simms are here to give you no nonsense guidance and support with understanding your responsibilities and tackling your debt problems so that you achieve the best possible outcome for all stakeholders.
We have the answers to the insolvency and rescue questions company directors ask.
We know how stressful and bewildering the prospect of insolvency can be. We also know that company directors are seldom trained on how to manage through business rescue, turnaround and insolvency.
So rest assured that expert advice is just a phone call away to answer all of your most frequently asked questions such as:
What are my duties and responsibilities when my company runs into financial trouble?
Your primary responsibility, whether times are good or bad, is to protect your stakeholders’ interests, particularly those of your creditors. This means taking action by talking to a Licensed Insolvency Practitioner before the situation deteriorates. If your company enters an insolvency process, control of its affairs passes, by law, to the appointed Insolvency Practitioner. A CVA or Company Voluntary Arrangement is an exception to this rule where the Directors continue to operate the company through thus insolvency procedure.
Will I be personally liable for my company’s debts?
In brief, unless there is evidence of wrongful or fraudulent trading, or personal guarantees have been provided to creditors, you will not generally be liable for limited company debts.
Will my company be able to continue trading if it is insolvent?
Depending on the circumstances of your insolvency, there are a number of ways you can restart an insolvent business. The business may survive through a different company but the original company may be closed down.
What happens if I don’t comply with my legal responsibilities?
Trading when insolvent is illegal. If you trade wrongfully or fraudulently, fail to pay tax or keep up with reporting requirements you could be banned from being a company director for up to 15 years. This is why seeking professional advice from a Licensed Insolvency Practitioner is essential.
Can I become a director of a new company?
Unless you have been disqualified, adjudged bankrupt, or are subject to bankruptcy restrictions, there’s no reason why you shouldn’t open another company. We can advise on the best company restart option for your circumstances.
You can find lots of useful, in-depth advice on all of these topics on our website and in our blog.
How FA Simms & Partners can help
You have nothing to lose and potentially business continuation and a return to solvency to gain by picking up the phone for a chat or arranging a face-to-face meeting at your offices.
Because we are licensed, regulated and have more than 40 years in business helping companies like yours through insolvency procedures, you can be confident that you are getting the very best professional advice.