When Can A Director Be Held Personally Liable For The Company’s Assets?

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When Can A Director Be Held Personally Liable For The Company’s Assets?

A director of a company that is in financial difficulties could face personal liability in respect of:

1. Personal Guarantees:
It is standard practice for lenders to take a charge over your property so that they can recover the debt in the event that you cannot pay and they have had to go to court.
It is possible for some suppliers to request a Personal Guarantee from a director of the limited company as a security for company borrowing.

If you have signed a Personal Guarantee in favour of a creditor, you could be called upon to pay any shortfall, up to the limit of the guarantee plus interest. We could assist you by trying to ensure that the guarantee is not called in. If the business is not viable and has to go into liquidation then it is possible that we will try and reach an agreement with the lender or creditor on your behalf.


Our team can assist you if you have concerns about liability as a director may impact your business or future business opportunities. If you would like to have a confidential discussion with a member of our team, if you complete our contact us form, we will call you back at a time that is suitable for you or you can contact us directly on 01908 414990. 


Top tip: It is possible to get personal guarantee insurance which should cover the costs.

Another Top tip: Take legal advice to make sure that the guarantee is valid as they can sometimes can be drawn up or executed incorrectly. Landlords can also ask for Personal Guarantees for rent arrears and the liabilities under the lease from you. Landlords can try and call these in. However, if you are building up arrears with the rent then you must take advice as to lease obligations as you can be bound in a CVA and the power of a CVA enables you to vacate premises if necessary.

Top tip: It may be possible to assign the lease to another operator to ensure that you are not responsible for the remainder of the rent.

Back to Main Directors Liabilities

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