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

Bodycare set to shut 32 of its stores Nick Holloway of administrators Interpath

Bodycare set to shut 32 of its stores

05 Sep 2025

2

New private client service from Vincents Solicitors Amanda Winder

New private client service from Vincents Solicitors

05 Sep 2025

3

Pets Choice acquires several brands from Kennelpak Tony Raeburn at Pets Choice

Pets Choice acquires several brands from Kennelpak

04 Sep 2025

4

JJO is acquired by 4D Capital Partners JJO in Bacup

JJO is acquired by 4D Capital Partners

04 Sep 2025

5

Carousel tax fraudster loses £90m property empire Arif Umarji Patel with the seized Ferrari counterfeit underwear container with counterfeit clothes inside

Carousel tax fraudster loses £90m property empire

03 Sep 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
Sub36 Networking - Follow the signs
Sub36 Deaf Village Social1200
Networking
17 Sep 2025

Sub36 Networking - Follow the signs

The Deaf Village, Blackburn, BB2 5EN

10:00 - 12:00

LBV124 September/October Launch Event
MBP Arc Cinema Preston Opening 205
Networking
18 Sep 2025

LBV124 September/October Launch Event

The Arc Cinema, Preston, PR1 2BL

08:30 - 10:30

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

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

Longridge Soap Box Derby
Screenshot 2025-06-10 090035.png.png
LBV Hub Fundraisers
14 Sep 2025 - 14 Sep 2025

Longridge Soap Box Derby

Berry Lane, Longridge, PR3 3WH

10:00 - 16:30

Preston Tech Connection - The Ultimate Tech Quiz!
Preston Tech Connection Sept 25.png.png
LBV Hub Networking
16 Sep 2025 - 16 Sep 2025

Preston Tech Connection - The Ultimate Tech Quiz!

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 19:00

The Business Network Central & East Lancashire
LBV Hub Networking
17 Sep 2025 - 17 Sep 2025

The Business Network Central & East Lancashire

Stanley House, Blackburn, BB2 7NP

11:30 - 14:15

Cumbria Business Expo 2025
https---cdn.evbuc.com-images-880461633-4862066883-1-original.20241022-110415.jpeg.jpg
LBV Hub Exhibitions
19 Sep 2025 - 19 Sep 2025

Cumbria Business Expo 2025

Carlisle Racecourse, Carlisle, CA2 4TS

09:00 - 15:00

Preston Freelancer Meet-Up: September
Sept Freelancer (1).png.png
LBV Hub Networking
23 Sep 2025 - 23 Sep 2025

Preston Freelancer Meet-Up: September

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Your Business, Your Region: Making sense of devolution and Local Government Reorganisation
Chorley Council breakfast event new
LBV Hub Networking
23 Sep 2025 - 23 Sep 2025

Your Business, Your Region: Making sense of devolution and Local Government Reorganisation

Worden Hall, Leyland, PR25 3DH

08:00 - 11:00

Speed Networking with BNI
2.png.png
LBV Hub Networking
24 Sep 2025 - 24 Sep 2025

Speed Networking with BNI

Chorley Football Club, Chorley, PR7 3DU

16:00 - 19:00

The Marketing Meetup IRL: Lancashire - September
TMM Lancashire
LBV Hub Networking
25 Sep 2025 - 25 Sep 2025

The Marketing Meetup IRL: Lancashire - September

Chorley, PR7 2SL

18:00 - 20:00

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 LBV 123 Online Graphic
Subscribe now

Weekly news bulletin