In short, the answer to this question is yes of course you can! Directors have never been forbidden from running another company following the liquidation of a previous. This is a common misconception amongst business owners who worry about liquidating their company as they believe it may affect them personally. It is this misunderstanding that causes struggling business owners to avoid liquidation and therefore, more often than not, make their financial situation worse.
There is absolutely no legislation to prevent you from acting as a director of another company, even if your previous business entered into administration or any other type of insolvency procedure. Nevertheless, there are two very important exceptions to this rule, the main one being disqualification.
The Exceptions to the Rule
During your tenure of an insolvent business it is important that you act professionally and avoid any decisions that could further prevent your creditors from recovering the debt you owe. Continuing to trade in this instance is regarded as gross misconduct and you will be accused of wrongful trading. When you business is insolvent there are certain obligations you must adhere to, with the primary aim of paying back the debt that your business owes.
Failure to comply with these obligations can also result in you being personally accused of wrongful trading. A director found guilty of such can face a fine or be disqualified from acting as the director of a limited company for up to 15 years. The other exception to the rule lies within bankruptcy. You cannot act as a director of a limited company if you are bankrupt. Bankruptcy typically lasts for 12 months, so during this time you are prohibited from acting as a director.
If you’re after further liquidation advice, Clarke Bell offer Free Initial Consultations. Contact us on 0161 907 4044 and speak to an insolvency expert.