Every director has statutory duties under the Companies Act 2006 which require him or her to observe a number of general duties; for example a director should always act to promote the interests of the company and its shareholders and avoid personal conflicts of interest.
However, when a company becomes insolvent a director has an additional duty and his main focus should now be on the protection of the interests of creditors. In such a situation we will advise a director on his responsibilities and warn of the potential personal liability of failing to discharge his duty to creditors.
We will also proactively recommend ways for the director to avoid personal liability. Whilst the law does give some leeway to a director who acts honestly in his efforts to rescue or restructure a business it is always best to take and follow professional legal advice.