Running a struggling business is stressful — and when pressure builds, even good directors can accidentally make decisions that put them at legal or financial risk.
Many directors are shocked to learn that actions they thought were "normal" can later be classed as wrongful trading or director misconduct during insolvency investigations.
When a company becomes insolvent, your legal duties change. Your priority shifts from protecting the business to protecting its creditors.
You could be held personally responsible for company debts
Banned from being a director for up to 15 years
Court-ordered payments to creditors from personal funds
Aggressive pursuit of tax debts with personal liability
Criminal prosecution in severe cases of misconduct
Most directors don't get into trouble because they acted deliberately
They simply didn't know the rules.
These are the actions that catch directors by surprise during insolvency investigations
Failing to file statutory documents can be viewed as poor governance and may suggest financial mismanagement.
🔍 Search Terms: late filing penalties, Companies House filing issues, director compliance mistakes
HMRC arrears are one of the biggest red flags during insolvency. Long-term tax debt suggests that the business was insolvent earlier than the director realised.
🔍 Search Terms: HMRC arrears, VAT debt help, PAYE arrears support, Corporation Tax debt solutions
Most directors don't realise dividends can only be paid out of profits. Taking money when no profit exists can later be seen as taking creditor funds.
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This includes paying friends, family, yourself, one supplier while ignoring others, or the bank because you're personally guaranteed.
If the company enters liquidation, a liquidator may recover these payments.
🔍 Search Terms: preferential payments insolvency, creditor priority rules, liquidator recovery claims
If you borrow money knowing (or should have known) the business couldn't pay it back, this may be treated as wrongful trading or misfeasance.
🔍 Search Terms: business loans insolvency, director liability loans taken in distress
Common accidental mistakes include:
Liquidators now investigate BBL use very closely.
🔍 Search Terms: Bounce Back Loan misuse, director liability BBL, BBL investigation support
(And Why They're Usually Not Intentional)
Most directors who make these errors are not acting dishonestly.
Making tough decisions under financial strain without full awareness
Good intentions that inadvertently cross legal boundaries
Following guidance that doesn't account for insolvency law
Complex regulations that aren't clearly explained
Acting quickly under stress without proper consideration
Optimism bias leading to delayed action
We see these situations every day — good people making tough decisions without guidance.
That's exactly why we're here to help.
We provide calm, specialist support to help you avoid accidental wrongful trading and minimise personal risk.
No obligations, no pressure — just honest guidance
Comprehensive assessment of your financial and legal situation
Plain English guidance on what risks exist and how to avoid them
Practical actions to stay compliant and protected
Help before, during, or after insolvency processes
Help dealing with HMRC, creditors, lenders, and liquidators
Our focus is on helping you:
Director Protection
Specialist UK Insolvency Advisors
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A short, confidential conversation can prevent a small issue from becoming a serious problem.
Clear, honest guidance
Plain English explanations
Understanding support
Made for your situation
Avoid personal risk. Get clarity. Protect your future.
Tenable Business Support
Helping directors make the right decisions when the pressure is highest