Before we start this blog on ‘Limited Company Failing – What’s my personal Exposure?’, we are pleased to announce that we have settled for our client, Personal Guarantee at c25% of the amount Demanded by the Creditor. Our client was asset rich and when asked to comment he said “chuffed”.  A man of few words! 

If a company is approaching Insolvency, Directors can be faced with several issues on a personal level.

Firstly, there are fiduciary duties that an Insolvency Practitioner would need to consider in terms of the Directors conduct.  

To all intents and purposes, this blog is not considering these fiduciary matters. But concentrating solely on the monetary issues/exposure that could arise. These are: 


  • As part of the company’s indebtedness, Directors often give some form of security to obtain financial support, in whatever form. 
  • In some instances, this is pledged in the form of an Asset for example be it home or an investment property. In such instances, negotiation is tough, but can still be undertaken. 
  • Very often the security offered takes the form of a Personal Guarantee (PG), something we at Bell & Company have promoted extensively, especially recently. 
  • Bell & Company specialise in this area and if a PG has been called upon, you should call us now.   


  • The demands of payment of overdrawn Director’s Loan Accounts will become more and more prevalent as the COVID-19 economic crash takes its course.  
  • Very often Directors ‘live’ on their DLA and the year-end accounts in these matters are typically rectified by dividends, mopping up the DLA balance. 
  • As and when a company enters Liquidation, the Liquidator will view any DLA’s as Assets to recover and will, therefore, be aggressive in their approach. 
  • For example, if the Liquidator concludes that the excessive use of a DLA by the Director has had cause to bring about the demise of the company. Then the matter of fiduciary issues come into play and could subsequently see Director Disqualification proceedings.


  • As mentioned in point 2 above, dividends are often used to clear any DLA’s. It is imperative that dividends are correctly drawn from PROFITS. There is a major difference between the cash flow of a business and its profitability. 
  • If a Liquidator concludes that the dividends are wrongfully taken, they will seek to recover these amounts, again aggressively. 

“Limited Company Failing – What’s my personal exposure and what should I do next?”

If your limited company is failing and one or more of the three points above apply to you (call Bell & Company!). 

It is imperative that you know your facts and we suggest the following as a basic plan of action:- 

  1. Do your own ‘housekeeping’. By this we mean look at your own Asset and Liability statement and be ruthless with it. To sum up, you should check your last couple of years of tax submissions to clarify your average income. 
  2. Ensure you have all the contractual documents required in respect of your PG’s etc. 
  3. Keep your management accounts for the business up to speed. This will particularly be relevant in terms of the fiduciary duty, but more importantly, establishing any correct DLA balance and or dividend exposure. 
  4. And finally, if any of the above are going to be ‘triggered’, determine the monetary amount and you need to settle these issues. 


Even if you do not call us, we implore you if you face such issues, to make sure you use third party representation.  

The reason for this is that you could try and do it yourself. However, you need to be fully versed with the facts and the tactics required.  Plus, you only get one chance…so do not mess it up! 

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