How does liquidation affect me personally?
Liquidation of your company may have less impact on your personally than you might think
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?
This 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 but 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.
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.