It is a common misconception that if you are a director of a company that fails and enters liquidation or administration, you cannot be a director in the future. However, this is not the case.
When a company is placed into administration or liquidation, there is an independent review of the company’s records and the decisions and actions of those who were directors in the last three years. From our experience, in the vast majority of cases directors act in good faith, seek help when they need it and generally act reasonably. If a mistake is made, and if reasonable steps were taken to recover the position, either at the time or even following insolvency, it is very unlikely that those involved will be barred from being a director in the future.
It is only in more extreme cases where directors fail to act, put their own interests ahead of others, or where there is persistently bad behaviour, that they face being disqualified from acting as directors in the future.
Directors who seek our assistance with their company are acting responsibly. This often signals good intent and how they would have approached past decisions. In the rare circumstance that an issue is identified, we find that directors can usually demonstrate it was unintentional and are keen to resolve the position. As a result, most learn from their experience and not only continue to be company directors in the future but prove to be better directors.