When your business is insolvent and goes into liquidation, whether voluntarily or through a compulsory order, your insolvency practitioner will prepare everything for you. This includes selling any assets of value, collecting any outstanding money owed to your business and in addition, they have to produce a report based on the conduct of the directors of the business that has become insolvent.
Once prepared your insolvency practitioner will send this report, which is based on three years of records, to the Department of Business, Innovation and Skills. Once received, the report and conduct of the directors will be reviewed and it will be decided whether you and any of the other directors will receive a ban from being a company director. This ban can potentially last as long as 15 years.
This length of ban would normally be for extremely poor conduct by the directors and could include things like:
Where you have personally guaranteed your businesses debts, this could mean bankruptcy for you personally if you cannot pay your creditors. You may also face difficulties in becoming a director in a company with a business name similar to your old one.
You may decide to look at all the options before deciding to liquidate your business. One option is to try to work out an agreement with your suppliers which may help the business to become solvent again and although this may seem a long shot, by continuing to trade, they actually stand to get their money back rather than not at all.
Alternatively you could put a formal agreement forward to the court for approval to see if this can avoid liquidation of your business.
If you want advice about insolvency and how this will affect you, please call our experienced team on +44 20 7490 5861, complete our Free Online Enquiry or email us on firstname.lastname@example.org and we’ll be in touch with you shortly to talk to you about how we can help.