When a limited company is in financial difficulty, directors aren’t usually personally liable for the business’ debts. That’s because limited companies are separate legal entities, unlike sole traders, who can be pursued for payment through the courts.

Nonetheless, it’s a difficult situation when a company struggles financially, and if you’re a limited company director it’s important to understand your duties and obligations.

If the company is formally insolvent, you’re legally obliged to stop trading and prevent any unnecessary financial losses for your creditors.

If you don’t do this you could face allegations of wrongful trading, and potentially be held liable for business debts.… Read more