The world of insolvency is a scary one for those undergoing it, and as such, it’s riddled with myths and half-truths. We’re often asked questions about life after insolvency, so in this blog post, we’re going to answer the most common – can a director survive company insolvency?
For managing directors company insolvency is a hard cross to bear, with many fearing that they may be disqualified from directorial positions in the future. The truth is that there are a wide variety of reasons behind automatic bans and disqualifications and they don’t all pertain to the liquidation or winding up of a company. These reasons can include a number of factors which relate directly to their conduct as a director, not the company he directed. In other words, company insolvency does not spell the end for a managing director, and she/he may carry on and find the road to success with another company.
“95% of managing directors carry on to success after company liquidation”
As a managing director facing insolvency, it’s imperative that you get the clearest, most transparent advice available, from the best source possible. There are many insolvency practitioners out there and finding a good one will not only give your company a fighting chance against insolvency, but it will also give you a solid foundation for what to do next as an MD. An insolvency practitioner or liquidation service will be able to advice you on the best course of action to take, but the likelihood of a managing director receiving a ban during his first experience of insolvency is extremely low. It’s worth pointing out that the insolvency service do have 2 year period after the winding up of a company to initiate disqualifications, but getting ahead of the game and getting an insolvency practitioner to assess your circumstances will stand you in good stead and let you know what to expect.
“Insolvency laws in the UK promote a ‘rescue culture’ and support entrepreneurship and courage”
If your practices have been earnest and you’ve taken a risk as a business that hasn’t paid off, insolvency or liquidation is not something to be feared. Insolvency laws in the UK promote a ‘rescue culture’ and support entrepreneurship and courage – risk taking is what building strong businesses and stimulates the economy, and insolvency is not a means of reprisal. Company insolvency is designed to help tie up loose ends and get things back on track – if a managing director has merely made a couple of bad calls it’s highly unlikely that it would lead to a ban or disqualification. Running a business is a learning experience and the world of commerce is a fast paced and ever changing beast which nobody has the power or authority to tame. If you have a business that’s facing insolvency, get the best advice possible from a dedicated liquidation or insolvency professional – not only will they help you through the entire process, but they’ll make sure you know where you stand personally.