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Wrong. There are a number of common scenarios where a director's personal assets may be at risk if a company falls into some sort of formal insolvency procedure. The most common ones are continuing to draw dividends from a company long after its profit reserves are exhausted, or trading on for too long after it's clear that the company has no reasonable prospect of recovery. The most important word in the above paragraph is "may". This is a complex situation and you therefore must speak

Liquidation of a company

money

Remember that formal insolvency processes are complicated, and the explanations below are only the tip of the insolvency iceberg!

A company enters liquidation when the reason for its existence has come to an end. In most cases this happens when the company is unable to pay its debts as they fall due.

There are 2 main types of insolvent liquidation ; a compulsory liquidation (where the procedure is controlled by the Courts) or a creditors voluntary liquidation (where the procedure is controlled first by the company’s shareholders/directors but ultimately by the creditors).

You may also hear the term “winding up” instead of liquidation or – bluntly, hear the company referred to as being “bust”.

To find out more about how we can help please call either Carol, Jackie or Jeanette on 01768 864466.