Insolvency: directors’ responsibilities
If you are a director you should get legal advice if your company becomes insolvent.
As a director you must make an early decision on whether or not the company should continue to trade. If you do decide to continue trading you will need to be sure that the company will be able to avoid liquidation.
As a director you need to be aware of your position regarding the business. It is your duty as a director to know the trading situation of the business. This is important as you may be:
- personally liable due to any personal guarantees
- both criminally and personally liable for fraudulent trading, that is, deceiving creditors
- personally liable for wrongful trading, that is, trading while the company is insolvent
You may be disqualified if you are found liable and you could face criminal proceedings.