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UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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I was till recently a Director of a company that will soon

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I was till recently a Director of a company that will soon be put into receivership with up to £20,000.00 monies owing. As a Director (albeit not now) am I liable personally and can baliffs come and remove my personal belongings ?

I also run a sole trader company which is not limited. I have a substantial amount of stock (goods) held under this company, can they remove these items ? Therefore would it be better to change this to a limited company ?

Were there any other directors and how did the 20K debts arise?
Customer: replied 4 years ago.

There is still one other active Director, and another that was removed last year. The debts arose as the remaining Director removed some of his investment, leaving the company unable to pay its bills

Did the directors continue trading and incurring the debts when they knew that there was no prospect of the debts being repaid?
Customer: replied 4 years ago.

I dont think any additional debts were incurred after this point

Customer: replied 4 years ago.

I dont think any additional debts were incurred after this point-


my main concern is for my new business, can my stock be taken, and would putting it into a limited company protect this ?

Thank you.

Now to respond to your questions:

Yes, as a director, you may be personally liable for the company's debts if you engaged in wrongful trading. However for this to happen, the company must first be put into liquidation (not receivership) as it it the liquidator of the company who may bring claims against you and your fellow directors under S. 214 of the Insolvency Act 1986.

On an application by the liquidator, the court has the power to declare that the directors are personally liable to make a contribution to the company’s assets in such amount that the court thinks proper, lifting the corporate veil of the company.

Under the Insolvency Act, directors incur personal liability for wrongful trading if, at some time before the commencement of the liquidation, they knew or ought to have concluded that there was no reasonable prospect of the company avoiding insolvent liquidation.


Your conduct will be assessed by reference to a reasonably diligent person having both the general knowledge, skill and experience reasonably expected of a person carrying out your duties as a director, and the general knowledge, skill and experience that you have.


You will have a good defence to a wrongful trading claim if you can show the court that you took every reasonable step to lessen the potential loss to the company’s creditors

So, yes, your personal assets and stocks are at risk and putting them in a company will not help as the court has wide powers to order you to pay up.

Hope this helps
Customer: replied 4 years ago.

Hi again, I have personally taken huge steps in order to make sure many creditors were paid by paying them back in stock then buying off them from my own money in order that they get what they were due.


The remaining Director since joining the company a couple of years ago has solely controlled the bank account and the company's accounts. Leaving me completely unable to influence who and how much was paid out etc. The only way I could pay any bills was to invoice for equal value stock to clear the debt.

Thank you.

In that case it would appear that you may escape liability as you seem to have taken reasonable steps to pay back the creditors.

At the end of the day, it all comes down to what the court orders, it seems like the remaining director is more at risk than you.

Hope this clarifies.

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Customer: replied 4 years ago.

Hi once more, he is also a millionaire, and I dont even own a house !!

Thank you.

As advised, it seems he is more at risk than you!

All the best
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