Company insolvency questions answered
These are the questions worried directors actually ask, answered straight and sourced to UK rules. The recurring theme is reassurance plus realism: in most cases you are not personally liable for company debts, but there are specific exceptions worth understanding, and in almost every case acting early gives you more options and less risk. Use these answers to get your bearings, then the relevant guide or tool for the detail, and a free, confidential review of your situation when you want to know what fits your own company.
Am I personally at risk?
Will I lose my house if my company goes under?
Not because of the insolvency itself. Company debts belong to the company. Your home can be at risk if you owe money personally, most often under a personal guarantee or through an overdrawn loan account. A guarantee does not have to be secured on the home for this: a creditor with a court judgment against you can ask the court for a charging order over your property, and a creditor owed £5,000 or more can apply to make you bankrupt, after which the trustee may sell your home depending on how much equity is in it. Our personal guarantees and your home table sets out each route and the law behind it. Take advice before assuming the worst.
Can I be made personally liable for company debts?
Usually no, but there are exceptions: a personal guarantee, an overdrawn director loan account, wrongful trading, misused Bounce Back Loans, or some unpaid PAYE and National Insurance. Early advice is the best protection.
Can I be a director again after liquidation?
Usually yes, unless you are disqualified. There are rules on reusing the old company name under section 216. A practitioner will explain the restrictions.
Closing or rescuing the company
What is the cheapest way to close a company?
For a solvent, debt-free company, strike off via DS01 is cheapest. With debts, that usually fails and a CVL is the proper route. Use our closure route chooser.
Can my insolvent company be saved?
Often yes, if the underlying business is viable. Administration or a CVA can deal with historic debt while the business keeps trading. Viability is the deciding factor.
How much does liquidation cost?
In Jessica Barker's experience as an insolvency practitioner, a straightforward CVL costs from around £4,000 to £7,000 plus VAT as a starting point, usually met from company assets. The Insolvency Service's study of 2,717 CVLs that began in 2017 gives a different picture: “The median cost (fees as a percentage of the value of the estate) was 163%”, and it records “instances of a third party or a director paying part/all of the fees” (Insolvency Service CVL research report). We show both. Our liquidation cost calculator gives a range for your situation.
HMRC and creditors
What happens if my company cannot pay HMRC?
Engage early. HMRC often agrees a Time to Pay arrangement if it is realistic. HMRC sets no fixed time limit: the length depends on what you owe and what you can afford. Ignoring HMRC leads to enforcement and ultimately a winding-up petition.
I have a winding-up petition, what do I do?
Treat it as urgent. You usually have a short window before the bank account is frozen and the hearing. Get advice the day you are served. See winding-up petitions and our timeline tool.
Can a company be wound up over one unpaid invoice?
A creditor owed more than £750 can ultimately petition to wind the company up, though they usually escalate first through demands. Disputed debts are treated differently. Do not ignore it.
In-depth answers
Longer, fully sourced answers to the trickier questions directors ask when insolvency is close:
- Employee and creditor questions: wages, redundancy and who gets paid first
- Can I still pay wages after a winding-up petition?
- Is repaying my director's loan or a Bounce Back Loan before liquidation a preference?
- Can I claim director redundancy if my company is liquidated?
- Will liquidating my company affect my personal mortgage?
- What happens to a director of a company in liquidation?
- Does company insolvency affect my credit rating?
- Should I close my limited company or make it dormant?
- Can a company in debt pay a dividend?
- Can a company go bankrupt?
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