Usually, a company director will not be personally liable for company debts or losses because they’re protected by limited liability.
Can a director own another company?
The general answer is that you can be a director of as many companies as you like at the same time. However, if you have been the director of a liquidated company and you set up a new company it cannot have the same or a similar name to the old company, to reduce any confusion for creditors of the old company.
Can I sue company director personally?
Directors of companies can be made personally liable. The general rule is that if you have a contract with a company and the company goes into liquidation, you cannot pursue the director personally if the company has no money to pay you .
What happens if a Ltd company goes into insolvency?
If you’re a Ltd company director whose business is struggling to pay its bills and staring down the barrel of an insolvency, you might be concerned that you could be made personally liable for your business debts.
Can a personal guarantor of an insolvent company?
In the Sanjeev Case, the Allahabad High Court has answered the above question in the negative stating that a personal guarantor of an insolvent company is not liable to pay the debt for the reasons as provided below:
Can a director be personally liable under Insolvency Act?
Section 213 of the Insolvency Act refers to the more serious charge of ‘Fraudulent Trading’, which means that any actions taken by the director were done ‘knowingly.’ Defrauding creditors or any other member of the business may be held personally liable to contribute to the assets of the business.
What happens if directors personal guarantee is invalid?
If it has not been drawn up and/or executed correctly, it could well be invalid. The second route is to talk to the creditor (if you haven’t already). Legal action can be a lengthy and costly affair, and most creditors would accept a negotiated settlement, as long as there is a strong commercial case for them to do so.
