What happens when limited company goes into liquidation???and what happens to the director?
The director and the limited company are two separate legal entities. As has already been said, provided the director has not made any personal guarantees, he or she is not liable for the company’s debts in the case of a limited company. There is a process that needs to be gone through to advise creditors that the company has ceased trading, to invite them to a creditors’ meeting and to resolve how the outstanding debts are going to be handled. Depending on the level of the debts, some creditors will just write them off as they’re not worth pursuing. Any creditor owed more than £750 can take out proceedings against the company that will start the insolvency process. If you’re in the UK, contact your local Business Link. They can usually refer you to an Insolvency Practitioner for a free 1 hour consultation that will give you enough information on how to go forward. There are different ways of handling this and some are not appropriate in certain circumstances.
