Directors Bankruptcy

Thinking of a Directors Bankruptcy? What Are The Options?

Directors bankruptcy requires expert professional help if the aftermath is to be as painless as possible.

The term director’s bankruptcy is something of a misnomer, as no such term exists in law. But directors of limited companies may face bankruptcy if they have personally guaranteed the borrowings of the company. In a liquidation of a business, many creditors, both secured and unsecured, do not get their debts paid in full. Often the directors of the business have had to secure borrowings for the firm by providing their own assets as collateral. If the company cannot afford to repay the loans provided to it, or discharge an overdraft or invoice finance then the directors who agreed to pay those debts in the stead of the company will be called in to do so.

In our experience, guarantees are often limited to set sums, for instance £25,000 or £50,000. Equally often, a charge is taken over property of the director, usually the matrimonial home. Such property is at risk if the debts cannot be re-paid. In rare occasions, where the loans are perceived as risky or maybe open ended in nature, unlimited guarantees may be obtained.

If the PG is called in the Director may be given some small time in which to arrange his affairs to pay off the debt. However, it is often the case that as the company folds so does any income that the director could earn to pay off the liability to the lender.

If the director has no assets and suddenly a large amount of liability, often the director’s bankruptcy may be the only answer. We have experience in taking directors through the bankruptcy process, stage by stage. We prepare the statement of affairs and the petition. We ensure that the documentation is accurate and reflects the reality of the current situation and not the lifestyle that the director may have previously lived.

We book the court hearing and also attend court to ensure that paperwork is filed correctly; and if there are any questions from the judge, they can be answered without too much distress. We will be available for advice if required, following any interview with the Official Receiver.

We can subsequently then advise on which bank accounts to apply for and after the director has emerged from his year in bankruptcy, we can help him become a company director again and seek any funding now required. If you are a company director and you are either worried about going bankrupt or require help to do so, please contact us without delay.

If you would like to talk about directors' bankruptcy to a specialist with 17 years corporate insolvency experience then enter your details into the web form below for a no-obligation chat.

However, if you need help with personal debt (rather than business related debt) go to our free debt management plan application form.

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business bankruptcy
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voluntary liquidation
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