Directors, Shareholders & Guarantors
Our insolvency specialists are here to support directors, shareholders and guarantors on a wide range of legal disputes, from issues over personal liability for company debts, to director disqualification matters.
When a company becomes insolvent, there may be circumstances in which its directors or shareholders are pursued instead of, or in addition to, the company. This is often the case where a director or shareholder has provided a personal guarantee (a legal contract agreeing to repay the company’s debts if it fails to fulfil its obligations).
Personal liability may also arise in other situations, for example, proceedings may be brought against a director who has breached their fiduciary duties (duties a director owes to a company). As well as potential claims, directors can face other serious ramifications for failing to act in accordance with their duties, including disqualification from acting as a director for up to 15 years.
If your company is insolvent or you are facing any sort of personal legal action in your capacity as a director, shareholder or guarantor, it is essential that you seek legal advice to seek to limit the impact on you.
We will provide pragmatic advice and rigorously defend you against claims from lenders, creditors, Insolvency Practitioners, HMRC and any other individual or organisation.
We also provide advice to sole traders and partners in business partnerships. Find out more about how we can help sole traders and partners.
If you are a creditor looking for advice on recovering a debt from a company, sole trader or partnership, visit our Lender and Creditor Services page.
Why our expert insolvency solicitors are the right choice for directors, shareholders and guarantors
Independently recognised expertise
We are a dedicated insolvency and restructuring practice, highly esteemed for our work with directors, shareholders and guarantors. We have received independent recognition for our skills in this area in the leading client guides, Chambers & Partners and Legal 500.
Years of experience
Our firm has specialised in providing legal advice on corporate insolvency and bankruptcy since its inception in 1885. With years of experience behind us, our director-led team are specialists in their fields. Our clients can trust us to provide the highest quality advice and innovative service that takes into consideration their unique needs.
Your legal options set out in plain language
We understand that a lot could be at stake. Our lawyers will ensure you are fully aware of all your options and the effect of each. No matter how complex your circumstances, we will listen to your concerns and provide practical advice about our recommendations. We aim to help our clients reach the best solution, as cost-effectively as possible, minimising the potential damage to their professional and personal lives.
The services provided for directors, shareholders and guarantors in more detail
Advice for directors
If you are a director of a limited company and are facing a dispute or claim, we are here to help. Our legal advisors can provide debt, insolvency and related advice, tailored to your needs.
Our expertise includes defending directors against a wide range of claims, such as wrongful trading and breach of fiduciary duty. We can also assist in disqualification proceedings, taking all possible steps to reduce the impact on your career.
Claims against directors
When a company fails, there are usually questions from stakeholders and third parties – such as creditors - including HMRC, shareholders and the Insolvency Practitioner – about how its financial difficulties arose.
Attention often falls on the company’s directors and the decisions they made during the company’s lifetime. A director owes significant duties to the company and its creditors, which means they are at risk of claims if the company fails.
The consequences of a successful claim against a director can be catastrophic and can include bankruptcy and/or disqualification proceedings.
So, if you are facing legal action in your capacity as a director, you need specialist advice about your options and how to manage the situation. Our dispute resolution experts can advise on a wide range of claims, including those brought by:
- The Insolvency Practitioner;
- The company’s creditors (for example, in relation to the enforcement of a personal guarantee); and
- The company’s landlord or suppliers.
When a company enters into liquidation, administration or administrative receivership, the liquidator, administrator or administrative receiver must examine and prepare a report on the directors’ conduct. This may lead to an investigation, which could result in disqualification.
Being disqualified as a director prevents you from running or being associated with a business, for up to 15 years. This, of course, could have serious implications for your career.
We help directors who are facing potential disqualification. We understand that running a business requires you to make difficult and sometimes daring decisions. If a company becomes insolvent, it is not necessarily the fault of the directors.
However, even if you are convinced that no wrongdoing has taken place, if you become aware of an investigation into your conduct, you should seek legal advice immediately.
We can expertly represent you during the investigation and disqualification proceedings, including:
- Dealing with and making representations to the Insolvency Service;
- Defending you in court proceedings;
- Negotiating settlements, seeking to minimise the impact on your life and career
- Advising on disqualification undertakings;
- Helping you to apply to court to seek permission to continue to act as a director if you have already been disqualified as a director (if you fit the criteria)
Advice for shareholders
When a company becomes insolvent, it is common for disputes to arise amongst its shareholders, or between its shareholders and other parties, such as directors, creditors and the Insolvency Practitioner.
Our insolvency solicitors can provide tailored advice for shareholders upon the winding up of their company. Our expertise includes advising on:
- Making claims against directors, including for breaches of directors’ duties;
- Disputes arising from a shareholders’ agreement; and
- Personal guarantees and defending claims.
Advice for guarantors
Business loan providers will commonly ask directors, and sometimes shareholders, to sign a personal guarantee, before lending. For many individuals, agreeing to these personal guarantees is often the only way to secure adequate funding for their business, but it opens them - as guarantor - up to the risk of personal liability if the business cannot repay its debts.
We can assist with a wide range of personal guarantee issues, including:
- Providing bespoke advice on the legal implications and possible consequences of signing a personal guarantee;
- Advising on the interpretation and enforceability of a personal guarantee entered into in the past; and
- Representing and defending you if you are being pursued under a personal guarantee