What happens to a director of a company in liquidation?

By Business Helpline

30 Nov 2022

Going through a liquidation as a company director can be an extremely stressful time. This article breaks down the process and gives you an insight into what happens to a director of a company in liquidation. 

If you do need support and expert advice you can contact us on 0800 088 2142 or email us at [email protected]

What happens to directors in a Creditors Voluntary Liquidation?

If you go through a Creditors Voluntary liquidation as a director, you will effectively lose your powers, as the control of your company will be passed over to an Insolvency Practitioner (IP). 

This IP will oversee the liquidation process and sell off the company’s assets to pay outstanding creditors. You will be required to fully cooperate with the IP and provide all the necessary information during this process. 

In addition, there will be an investigation into the conduct of the director as part of this process. You may also be asked to attend an interview with the IP where they are asked to provide a statement of affairs. 

Directors Conduct report

What is a directors’ conduct report?

As part of the liquidation, the liquidator legally must submit a confidential report under section 7a of the Company Directors Disqualification Act 1986. This examines how the company operated and the conduct of the director. 

This is used to establish if the failure of the company was due to mismanagement or fraud. 

What may be considered as misconduct?

Trading whilst insolvent. Acting fraudulently. Not keeping accurate accounting records.  Depriving creditors of assets.  Not submitting tax returns

It is worth noting you can be banned from being a director for up to 15 years or even prosecuted if the liquidator finds your conduct was unfit. 

Can a director of a company resign from a company in liquidation?

Yes, you can resign as a director during a liquidation. However, you will still have to comply with the liquidator and fulfil your obligations. 

You can also be held personally liable for business debts if you have personally guaranteed any loans or lease agreements if your company is insolvent. 

Can I be a director of a company after liquidation?

Yes, you can be a director of a company after liquidation, provided there aren’t any cases of misfeasance (wrongdoing). There are however rules you would need to follow to ensure you comply with legislation. 

You aren’t allowed to use a similar business name as your previous company, which can lead to criminal action against a director. 

You should read section 216 of the Insolvency Act 1986, which highlights the restrictions on the re-use of company names. 

It is however possible to buy the previous company name. The Insolvency Practitioner can agree to see the name, supported by a court application. 

Conclusion: What happens to a director of a company in liquidation?

There are many factors to consider when analysing what happens to a director of a company in liquidation. Much is dependent on the conduct of the director throughout the running of the business and whether they have kept to their director responsibilities. 

For free confidential advice and support contact the business helpline on 0800 088 2142. We’ve helped thousands of directors just like you. 

Latest news

1

Beever and Struthers advise on £1.5bn funding for 2,000 new social homes a year John Jones

Beever and Struthers advise on £1.5bn funding for 2,000 new social homes a year

03 Jul 2025

2

Airframe Designs aligns with US programme for additive manufacturing growth Additive manufacturing technology unit At Airframe Designs

Airframe Designs aligns with US programme for additive manufacturing growth

03 Jul 2025

3

Panache Cruises on course for further growth with support from Rosebud James Cole

Panache Cruises on course for further growth with support from Rosebud

03 Jul 2025

4

Lancashire emerges as key player in UK's Defence and Tech Sector Mo Isap Chair Of The Lancashire Business Board Nick Miles National Cyber Force Deputy Director For Samlesbury Annette Weekes Representative Of The NWRDSC

Lancashire emerges as key player in UK's Defence and Tech Sector

03 Jul 2025

5

Report shows impact of BAE Systems in Lancashire BAE Systems Radar

Report shows impact of BAE Systems in Lancashire

02 Jul 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV123 July/August Launch Event
Lancashire Business View magazine launch
Networking
16 Jul 2025

LBV123 July/August Launch Event

Burnley

08:30 - 10:30

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

The Marketing Metrics that Matter – July 4
LBV Hub Seminars
04 Jul 2025 - 04 Jul 2025

The Marketing Metrics that Matter – July 4

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

08:30 - 11:00

Tri-Site Survey Equipment Showcase
unnamed (2).jpg.jpg
LBV Hub Seminars
09 Jul 2025 - 09 Jul 2025

Tri-Site Survey Equipment Showcase

Crow Wood Hotel, Burnley, BB12 0RT

09:30 - 16:00

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers
Champagne-Jewellery 10 07 25_page-0001.jpg.jpg
LBV Hub Awards
10 Jul 2025 - 10 Jul 2025

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers

Blackburn Cathedral, Blackburn, BB1 5AA

18:00 - 20:30

Choose Chorley for Business - Talent Reimagined Business Breakfast
talentreimaginedbb.png.png
LBV Hub Seminars
10 Jul 2025 - 10 Jul 2025

Choose Chorley for Business - Talent Reimagined Business Breakfast

Strawberry Fields Digital Hub, Chorley, PR71PS

08:00 - 10:30

Shaping Preston's future by remembering its past
1750160034867.png.png
LBV Hub Networking
16 Jul 2025 - 16 Jul 2025

Shaping Preston's future by remembering its past

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 20:30

Chamber Summer BBQ
LBV Hub Social
17 Jul 2025 - 17 Jul 2025

Chamber Summer BBQ

The Borough, Dalton Square, Lancaster, LA1 1PP

17:30 - 20:00

Preston Tech Connection: Web3 is Dead. Or is It?
July Longer Banner.jpg.jpg
LBV Hub Networking
29 Jul 2025 - 29 Jul 2025

Preston Tech Connection: Web3 is Dead. Or is It?

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 19:30

Preston Freelancer Meet-Up: July
Longer July Banner.jpg.jpg
LBV Hub Networking
31 Jul 2025 - 31 Jul 2025

Preston Freelancer Meet-Up: July

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin