What if I don’t Liquidate my company?
Once you are aware of a problem you, as a director, have a legal responsibility. We really can’t over-emphasise the need for you to seek advice if you are in this situation.
If you decide not to Liquidate your company, despite it having a debt problem, then there are certain consequences you should be aware of.
Personal Liability. A common consequence of trading an insolvent company is for the Directors to be made personally liable. Many Directors end up in the bankruptcy courts because they didn’t act when they realised there was a problem.
Banned from being a Director. If you do not act in accordance with Company Law, then it can be deemed that you are unfit to be a Director. When you took office, you made a promise to abide by the Companies Act, and by the fact that you have done nothing to resolve the problems, you have broken this promise.
Criminal Charges. Criminal charges can be brought against you for a multitude of reasons. One that is becoming more common is when Directors see fit to continue to pay themselves dividends, even though they know they are unable to pay their creditors.
The stakes can be quite high if you decide not to Liquidate your company. Should you find your company has a debt problem it is always best to get some professional advice, it’s free and it might just save you a very large headache.