Could you be held responsible for insolvency?
Carillion, formerly the second-largest construction company in the United Kingdom, went into compulsory liquidation on 25th January. Unfortunately, this type of situation is not uncommon, as the number of companies that entered insolvency in 2017 rose by 4.2 per cent to 17,243 according to the Insolvency Service.
Regardless of the size of the organisation, insolvency has significant repercussions for everyone involved - especially its directors and officers. The personal liability of your organisation's leaders can arise in several ways, including the following:
- Wrongful trading - The directors kept trading despite knowing that the company was insolvent.
- Fraudulent trading - The directors carried on business with an intent to defraud creditors
- Misfeasance - The directors wilfully took actions that injured another party.
- Redundancy notifications - The directors failed to notify the government of the collective redundancies
While hopefully it never happens, if your organisation should go bankrupt, your directors and officers need to know how to ensure that they are not held personally responsible. The most effective protection is with comprehensive directors' and officers' liability insurance.
Call David Hudson on 0161 834 1884 should you require further information.