Guidance

Director information hub: Debts and insolvent companies

A company that enters formal insolvency will in many cases have outstanding debts.

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There are differences between company and personal debts.

Are company debts personal debts?

Company debts are, as you would think, debts taken on in the name of the company.

These can include:

  • PAYE, National Insurance Contributions, Corporation Tax or VAT
  • business expenses and costs
  • bills from suppliers
  • unpaid staff wages
  • loans in the name of the company

Personal debts are debts taken out in the name of an individual, such as consumer credit or a personal car loan.

When are directors liable for company debts?

You are responsible for any money owed by your company that has been personally guaranteed by you as a director.

For example, a finance agreement, overdraft or a bank loan guaranteed by the director.

There are other circumstances where directors are personally liable, some of which are associated with wrongdoing.

Dealing with company debts

If your company is insolvent, it is important to address debts as soon as possible:

  • if you do, you may be able to arrange payment plans and limit the impact on the company creditors
  • if you do not, you are at risk from court and recovery action

Information on dealing with company debt

Business support helpline

The Directors Helpline

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Published 7 July 2023