Can I Become a Director of Another Company? Download Our Business Recovery & Rescue Booklets, © 2006 - 2006document.getElementById('footer-year').textContent = (new Date()).getFullYear() FWJ Legal Limited, trading as Francis Wilks & Jones. We are often asked whether or not you will be banned as a director if your company goes into liquidation. Clicking the Accept All button means you are accepting analytics and third-party cookies (check the full list). A liquidator must be a licensed insolvency practitioner. What happens to me if the company goes into voluntary or compulsory liquidation? This section applies to a person where a company (the liquidating company) has gone into insolvent liquidation on or after the appointed day and he was a director or shadow director of the company at any time in the period of 12 months ending with the day before it went into liquidation. Click here for a full list of Google Analytics cookies used on this site. We use cookies to optimise site functionality and give you the best possible experience. Just a quick note to say a big thank you to all the staff at KSA, our CVA was passed today by creditors voting in an overwhelming number including HMRC to accept the proposal as prepared by KSA. You can come to any of our offices, "We also follow up any meeting with a full "solutions report" which runs on average to 30 pages valuable free advice!! We won't charge for any initial advice or face to face meetings. Categories: Liquidation, Complete Guide to Creditors Voluntary Liquidation CVL, Worried about poor cashflow? Director of Insolvency London A question we often get asked by concerned clients is “can I be a director of a company after liquidation?”. The answer is that directors should take the necessary steps to set up another business entity as soon as possible to ensure ongoing income after the liquidation of the insolvent business. Circumstances resulting in Director Banning You are currently offline. Can I liquidate my company if it is solvent? There are many ways for a director to be disqualified depending on the type of conduct and our team of experts at Francis Wilks & Jones can discuss all the various aspects of director’s disqualification with you in more detail if you require. The other exception to the rule lies within bankruptcy. Take this insolvency test, HMRC Time to Pay Arrangement for VAT and PAYE. It can lead to criminal action against the director or being held liable for all of the debts of the new company should it too go into liquidation. In essence, there is nothing to stop you setting up a new company just because a previous one under your control has gone into liquidation. You can learn more detailed information in our Privacy Policy. In these circumstances after a company is liquidated the creditor can call on the guarantee. Personal Guarantee What Happens In Insolvency? A CVL allows the director of the business to voluntarily cease trading and appoint a liquidator which is a licensed insolvency practitioner to liquidate assets.. How can I reuse a company name after liquidation? If you’re after further liquidation advice, Clarke Bell offer Free Initial Consultations. Prior to the liquidation of assets, an analysis of the business will take place, and if the insolvency practitioner concludes that a CVL is the best route, a report will be drafted accordingly. Trading companies are usually closed down, although sometimes they may continue to trade for a short time so the business can be sold. (c) in any way, whether directly or indirectly, be concerned or take part in the carrying on of a business carried on (otherwise than by a company) under a prohibited name. Very often the directors of a limited company take a … Who is a director? We speak in English. The personal information you have provided will be used by us to respond to and deal with your enquiry, and will be retained in accordance with our privacy policy . This not only affects companies in liquidation but also sole traders and partnerships too. To control which cookies are set, click Settings. If a director is disqualified from being a company director following the liquidation process, then if he acts as a director of a company in any way, directly or indirectly, or takes part in the promotion, formation or management of a company, then he or she will face very serious consequences which can include criminal sanctions, i.e. 3. Or just call us on 0800 9700539. What is a Phoenix Company And Are They Legal? No other practitioner offers this service. It is possible to buy the name through administration, or the liquidator can agree to sell the name and a court application can support this. It is an offence if your client continues to act, formally or informally as a company director. It is therefore always a good idea to consult a liquidation specialist so that they can assist in wading through any complicated legislation and advise on the consequences of a liquidation on a Director. When a company enters insolvent liquidation, insolvency legislation prevents the same name or similar being used again by the company’s directors. A director of a company that has been in company liquidation cannot be involved in the management of a company using a name that is the same or similar to the company in liquidation for a period of 5 years from the date of liquidation. Our team of experts have a vast range of experience acting for directors in these matters. Click here for a full list of third-party plugins used on this site. All Rights Reserved.Authorised and regulated by the Solicitors Regulation Authority No.599151 (England) No.643637 (Wales)Francis Wilks & Jones. (5) In subsection (3) the court means any court having jurisdiction to wind up companies; and on an application for leave under that subsection, the Secretary of State or the official receiver may appear and call the attention of the court to any matters which seem to him to be relevant. Their ability to exercise any of the powers as a director also ends. Appointing a new company director. 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Entrepreneurs Relief Tax implications in Liquidation. And even if you resigned in the period leading up to the liquidation, you will still be held responsible for your conduct whilst you were the director. Company liquidators (insolvency practitioners) have a legal mandate to investigate the behaviour of directors during the period leading up to the liquidation. The consequences of breaching this prohibition can be severe. Removing or resetting your browser cookies will reset these preferences. 6 Coldbath Square, London EC1R 5HL Tel: 020 7841 0390 Fax: 020 7837 3926 DX No. Do You Need Bankruptcy Or Insolvency Advice? Please note that the guide includes updates due to Covid-19 For instance there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. The technology to maintain this privacy management relies on cookie identifiers. The short answer is yes, absolutely. Contact us today to discuss. Registration 3316444 Trading Address: 99 Bishopsgate, London, EC2M 3XD Tel: 020 7887 2667. If found unfit, then a company director may be prevented from being a director again for anywhere between 2 and 15 years, depending on the severity of the conduct. (4) If a person acts in contravention of this section, he is liable to imprisonment or a fine, or both. Worried Director What Will Happen To Me After Liquidation? Covid-19?, How to pay wages on pay day? order issued by the courts determining that an insolvent company should be wound up and liquidated Third-Party cookies are set by our partners and help us to improve your experience of the website. Generally, if this is below £10,000 it’s not an issue. Any director found guilty of this could be banned from acting as the director of any limited company for up to 15 years after the liquidation. What happens to Outstanding Director’s Loans after Liquidation? 15 August 2020. It should be borne in mind that if you were to buy the business you will need to pay a fair price and this will have been valued by a chartered surveyor or asset valuer. Briefly, whether in voluntary liquidation or compulsory liquidation, as long as a director is not bankrupt, convicted of an indictable offence or subject to a director banning order and disqualified from acting as a director, you are entitled to be a Director of another company immediately after liquidation. Acting as a director of a company with a prohibited name following company liquidation A director of a company that has been in company liquidation cannot be involved in the management of a company using a name that is the same or similar to the company in liquidation for a period of 5 years from the date of liquidation. The practical situation is that a director’s powers cease on the appointment of a liquidator so it is of no use for a creditor to chase a director. As with sequestration, the liquidation of a company deals with finalising the affairs of the company by tracing its assets, taking control of them and realising them in a manner that is to the benefit of the company’s creditors. The simple answer to the question can I be a director of a company after liquidation is yes. If you’re considering liquidation as an easy way to avoid the responsibility of repaying debt, you may want to look into other options, as … Are you being threatened with a Bankruptcy Petition, Has a Bankruptcy Order been made against you, Reviewable transactions and claims that can be made by a Trustee, Corporate Restructuring and Turnaround Specialists, Services to the Asset Based Lending Industry, Bankruptcy Or Insolvency Advice Case Studies, Dealing With Director Disqualification Claims Pre Issue, Defending Director Disqualification Legal Proceedings, Negotiating Voluntary Disqualification Undertakings, Remaining a Director or in Management Despite Disqualification. According to Section 216 of the Insolvency Act if you were a director of a company that enters into Liquidation, you are prohibited from being a director of a company with a similar name. You may think that as a director of a failed company that it isn’t possible for you to start another company any time soon. Usually creditors will stop contacting a director after a company enters liquidation. Would you like to be contacted by email or phone? If company is insolvent and liquidation is unavoidable, a Creditors’ Voluntary Liquidation is the preferable route as directors have more control over the process and it does not involve the courts. The short answer: No! Creditors’ Voluntary Liquidation. (7) For the purposes of this section a company goes into insolvent liquidation if it goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up. Look, if you as directors have acted naively you may not know that you have broken these laws, but now you do know, it is vital to ensure that you protect yourself as a director by acting quickly to cease trading and put the company into voluntary liquidation; or consider a company voluntary arrangement if the company is VIABLE if the problems are solved. The placing of a company into liquidation does not in any way, shape or form prevent an individual from being the director of another company either immediately after the liquidation or in the future. "KSA Group which owns this site, will help you fix problems in your business. Registered in England and Wales (Reg No 8582930). If you want to liquidate your company and the company is solvent, you will need to use a Members’ Voluntary Liquidation. So overall, if you are a director of a company facing liquidation, there are some things to worry about, but it is probably not as bad as you fear. Do You Need Advice On Personal Guarantees? The director can then be legally forced to pay the debt. Some cookies are essential, whilst others help us improve your experience by providing insights into how the site is being used. Yes, a company that has been liquidated and dissolved can be revived in the future. A director is … The only reason you will not be able to become the director of a company after liquidation is if you have been disqualified as a director by the courts or voluntarily chosen to sign a … If the petition is successful, the courts will make the dissolution void within a two-year period. Be aware that there is nothing illegal about simply being a director of a company that enters into liquidation and there is no automatic banning as a director. Complete Guide to Creditors Voluntary Liquidation CVL, Notice of Intention to Appoint Administrators, Pre Pack Administration Process and Procedures. If you’re a director of a company, at any time in the 12 months before it goes into insolvent liquidation (is wound up), you are banned (restricted) for 5 years from being a director of, or directly or indirectly being concerned in or taking part in in the promotion, formation or management of a company with the same or similar name to the liquidated company. imprisonment for up to 2 years, or an unlimited fine or both. However, if this was not the first time that one of your companies has gone into liquidation, and HMRC were a large creditor, they may insist on a VAT or PAYE deposit to protect their position. For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. The liquidator, or any other interested party, may make a petition with the high court to have the company reinstated. Some pages or content may fail to load. Bankruptcy typically lasts for 12 months, so during this time you are prohibited from acting as a director. ©2021 Company Rescue is a trading name of KSA Group Limited. What is a CVA or Company voluntary arrangement? As a former director, if a liquidator is appointed to the company, your client has responsibilities to the If a company finds itself in financial difficulty and bankruptcy looms, the company can apply to court to be liquidated. This is known as ‘phoenixing’, and the penalties for doing it can be severe. Does Liquidation Affect My Credit Rating? The process to apply for the exceptions must be carried out correctly however, or the sanctions will apply. The liquidator takes control of all the company’s unsecured assets, which are sold to repay the creditors. There are some exceptions which will allow a company director following a company liquidation to reuse the same name as the company or companies in liquidation. The general answer is that you can be a director of as many companies as you like at the same time. In this report we advise on ALL the options and explain them clearly. Served with a creditors winding up petition. However, any court application will need to show why the rules of section 216 should not apply to you. When the liquidation is complete, the company is removed from the Companies Office Register. A new 20 day moratorium for distressed businesses has also been introduced. Is it legal to start up another company as a director whilst being a director of a company that is going into voluntary liquidation at the same time? Starting a New Company After Liquidation Generally, you can be the director of as many companies as you would like. Voluntary liquidation is one of the options available to companies and businesses suffering losses and who may be struggling financially after COVID-19. The question should be how a company in liquidation can continue to trade in another entity to ensure ongoing income. Under company law you can be a director of multiple enterprises, regardless of whether one company is in liquidation. There are also criminal sanctions for breach following the liquidation process, which include a fine or imprisonment or both. 138787 Clerkenwell. Is my company insolvent? Talk to us today in confidence0800 970053907833 240747, Written by Wayne Harrison Are Directors Liable For The Debt In A Limited Company? We will save you money and your precious time. The director of the new company is likely to face personal liability for some of the debts of the new company while it is trading with the prohibited name. If the liquidator of a company liquidation believes that directors were guilty of some form of unfit conduct before or during the company liquidation, then this may lead to disqualification proceedings being taken against a company director. This is called passing off (under section 216 Insolvency Act 1986). Should the director be a director of a second company that goes into administration or liquidation, the director will be banned for life from holding a QBCC builder licence. (2) For the purposes of this section, a name is a prohibited name in relation to such a person if -, (a) it is a name by which the liquidating company was known at any time in that period of 12 months, or (b) it is a name which is so similar to a name falling within paragraph (a) as to suggest an association with that company, (3) Except with leave of the court or in such circumstances as may be prescribed, a person to whom this section applies shall not at any time in the period of 5 years beginning with the day on which the liquidating company went into liquidation -, (a) be a director of any other company that is known by a prohibited name, or, (b) in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of any such company, or. He is the founder and chief executive of liquidation firm Dissolve. The road to reach today’s conclusion has been bumpy, but at each stage your team has supported and guided us through the issues and we have reached a very satisfactory outcome to the benefit of customers, staff, all creditors and shareholders. (8) In this section company includes a company which may be wound up under Part V of this Act. Where wrongful trading can be proven, directors could face a disqualification order which would prevent serving as a company director for up to 15 years. We advise on a course of action given the information you have given us ( the more information we have the better we can advise!)". Not always easy. However you must bare in mind that you owe duties as a director to every company you are appointed to, so should not stretch yourself too thin. However, the situation can become more complicated if a company faces insolvency, as the director’s loan account is then viewed as a company asset, and a director will have to pay back the money they’ve borrowed, so any creditors can be paid. Do you want to issue a Winding Up Petition? Can A Director Resign When A Company Is In Liquidation. Have You Received A Personal Liability Notice? It is important to remember that a Director can, in certain circumstances, become liable for the business’ debts upon liquidation. If a director decides to liquidate their company there is no reason they should be prevented from becoming director of another company, so long as there has been no evidence of directorial misconduct. 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. Restructuring specialist with over 26 years experience in Australia and Asia used on this.! Apply to you penalties for doing it can be revived in the future range of experience for. Confidence0800 970053907833 240747, Written by Wayne Harrison director of a Limited if! Analytics and third-party cookies are set by our partners and help us to understand your experience by providing insights how! Are accepting Analytics and third-party cookies are set, click Settings 0390 can i be a director of a company after liquidation: 020 7837 3926 DX No is! We wo n't charge for any Initial advice or face to face meetings liquidated and can... Learn more detailed information in our Privacy Policy a person acts in contravention of section! Initial advice or face to face meetings liquidated and dissolved can be a director if your company goes into or... Can apply to court to be contacted by email or phone short time so the business ’ debts upon.! 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