Company Director – Can I go Bankrupt
If you go Bankrupt you are not allowed to continue working as a company director or be involved in the management of a company.
- Can you go Bankrupt if you are a Company Director?
- How long after Bankruptcy can you be reinstated?
- Effects on your company if you go Bankrupt
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Can you go Bankrupt if you are a Company Director?
If you are an owner/director and you go bankrupt you will have to make arrangements for someone else to be appointed as the director in your place. You will have to resign from your post once you are bankrupt.
It is not good enough to simply resign as a director of your company. Once you are Bankrupt you are not allowed to be involved in the management of the company. The management decision making must be left to the remaining directors.
If you continue to manage a limited company while you are Bankrupt and this is discovered you could face an extension to your bankruptcy and even criminal charges. This is the case even if you have resigned as a director at Companies House.
There is no reason why you cannot continue to be an employee of your company. You can work for the business and receive a salary in return.
How long after Bankruptcy can you be Reinstated as a Director?
Normally you are restricted from being a director of a company only while you are bankrupt. Once you are discharged you can register yourself as a director again. You can also resume your involvement in the management of the company.
The only time this would not be the case is if you have received a Bankruptcy Restrictions Undertaking (BRU) or Bankruptcy Restrictions Order (BRO). If this has happened you must wait until your BRU or BRO is lifted. Only then you can take up the post of a director again. Remember the restrictions remain in place even if you have already been discharged.
Effects on your Company if you go Bankrupt
If you are the owner director of a limited company both you and your limited company are separate legal entities. This means that the company is not liable for your personal debts. In the same way you are not liable for the company’s debts unless you have given personal guarantees.
Given this the company’s finances including its bank account should not be affected if you go bankrupt. However if your personal account is held at the same bank as the company’s then the bank will know you have gone Bankrupt. This could cause a problem.
The bank cannot help themselves to any money in the company account. However they may be concerned about the viability of the company given your personal financial situation. As a result they could start to withdraw credit facilities such as the company overdraft or credit card as a precautionary measure.
This would clearly be extremely inconvenient for the company and may cause it to suffer. As such if you are the owner director of a limited company careful planning regarding your bank accounts must be carried out before you go Bankrupt.
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