How Will Liquidation Affect Me Personally?
The personal impact is often not as bad as many fear!
As long as you have not been fraudulent, borrowed money from the company, or showed complete disregard to your creditors then you shouldn’t have too much to worry about. Honestly, most people are relieved in the end and learn from their experience.
Will I be held liable for the company's debts?
The company is a limited liability entity and so as a director your are protected from the debt personally.
Unless
- You have been fraudulent
- Showed wilful disregard to creditors
- Taken excess money out of the company
- Personally guaranteed the company’s debts
Can I be a director of a company again?
Of course! As long as you have not been disqualified as a director. A director can be disqualified for a number of reasons, including wrongful trading, fraudulent trading or ‘unfit’ conduct. Failing to adhere to your duties as a director will result in an investigation and possible disqualification. This statement is based on the Company Directors Disqualification Act 1986 (CDDA).
Will It Affect My Credit Rating
There is no mention of liquidation on your individual credit report. However, it will be noticed if you attempt to take credit for another business in which you have a directorship. Something along the lines of “exercise caution as the director has had previous company failures” will be said by the credit rating agency. If something like this occurs only once, it usually doesn’t pose an issue. No matter how well your business is performing, it will be challenging for it to obtain credit if you have been a direcotor of multiple failed companies. Insurance companies can be very fussy about this, so your business insurance rate will almost certainly increase.
What About Personal Guarantees?
There is no getting away from personal guarantees but it is normally the case that debts are paid off over long periods or there is a negotiated settlement. We can recommend people who can do this negotiation for you.
Remember
It is always better to do a voluntary liquidation than wait for a creditor to do it through the courts!
