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How Will Liquidation Affect Me Personally?

10th November, 2022 / Posted in Directors

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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.


  1. You have been fraudulent
  2. Showed wilful disregard to creditors
  3. Taken excess money out of the company
  4. 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

Liquidation does not appear on your personal credit rating.  But if you try and raise credit for a different company of which you are a director it will be flagged.  The credit rating agency will say something like “exercise caution as the director has had previous company failures”.   Normally, this does not cause a problem if it happened just once. However, if you have had multiple failures it will be difficult for your company to raise credit, no matter how well it is doing. Insurance companies are particularly picky on this point so you will probably pay a higher premium for business insurance. If you liquidate a company with a substantial VAT liability it is likely that HMRC will ask for a deposit in a new company where you are the sole director. One other thing is if you are going to apply for a sensitive position in national security, or high finance, expect questions to be asked about the liquidation.

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.


It is always better to do a voluntary liquidation than wait for a creditor to do it through the courts!
Photo of Robert Moore

by Robert Moore

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