What are my Responsibilities as a Director?
When a company faces insolvency, the duties of a director shift significantly. Your primary duty changes from acting in the interest of the shareholders to acting in the best interests of the creditors.
Failing to adhere to these responsibilities can lead to personal liability for company debts or disqualification from being a director in the future.
What Happens if I Don't Comply?
If a liquidator finds evidence of misconduct, wrongful trading, or transactions at an undervalue, you could be made personally liable to repay money to the company. In serious cases, you could face disqualification as a director for up to 15 years.
Seeking early professional advice from a licensed Insolvency Practitioner is the best way to ensure you fulfill your duties and minimize personal risk.
Key Responsibilities During Insolvency
- Cease Trading: You should not incur further credit if you know the company cannot repay it. Continuing to trade while insolvent can be seen as "Wrongful Trading".
- Protect Assets: You must safeguard the company's assets. Do not sell, transfer, or hide assets for less than their market value.
- Treat Creditors Fairly: You cannot prioritize paying one creditor over others (e.g., paying back a family member or a loan you personally guaranteed while ignoring HMRC or suppliers). This is known as a "Preference".
- Cooperate with the Liquidator: Once appointed, you must provide the liquidator with all company books, records, and information they request. You must attend interviews if asked.
- Statement of Affairs: You are required to provide a truthful and accurate statement of the company's financial position.
To make a claim as a redundant director, you’ll need to:
- Be employed by the company and have been receiving regular wages for at least 16 hours work each week
- Have been employed by the company for a minimum of two years
Call us on 03303 411 285 today for more information or advice.
A successful redundancy pay claim could help you cover the costs of liquidation, finance a new project, or provide funds while searching for a new position.
Find out if you’re eligible to apply for redundancy pay by calling Cheap Liquidation on 03303 411 285 today. As experienced Insolvency Practitioners, we can provide you with the debt and statutory entitlement advice you need.
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