What Are a Director’s Legal Duties During Company Liquidation?
When a company faces liquidation, many directors feel overwhelmed and uncertain about what comes next. But one of the most important aspects of this process is understanding your legal obligations. If you’re a company director navigating liquidation, knowing your responsibilities can help you avoid personal liability and ensure the process is handled correctly. This blog sets out director duties during liquidation and what you must do to stay compliant under UK insolvency law. Understanding Liquidation: A Quick Overview Liquidation refers to the formal process of closing a company. It involves selling company assets, paying creditors, and ultimately dissolving the business. There are two main types of liquidation that directors typically deal with: Creditors’ Voluntary Liquidation (CVL): When the company is insolvent and unable to pay its debts. Members’ Voluntary Liquidation (MVL): When the company is solvent, but the directors and shareholders have chosen to close it. Regardless of t...