Liquidation Impact on Directors: Personal Liabilities and Disqualifications
If a business falls on hard times and needs to go into liquidation, directors are usually curious about whether or not they are going to be liable for any of the company’s ongoing debts, and also what their general liabilities are towards the company. This is a fair question and will discuss Liquidation’s Impact on Directors throughout the below article. Protection from Debt As a general rule, directors of limited companies are usually protected from any kind of personal liability for the debts of the company. The clue is in the name of a limited liability company, which essentially means the company is its own legal entity, so its debts are its own and not that of the director. One of the main reasons that people start a limited company, even if they are a sole trader or in a partnership for the time being is because they can limit their exposure to business debt by doing so. They are incorporated as distinct legal entities and as such, the court views this as an entity which is ...