Guiding You Through... Guide For Directors Of A Company Facing Insolvency

DUTIES OF DIRECTORS OF A BVI COMPANY FACING INSOLVENCY

What should I do if I am a director of a company facing insolvency?

Directors of companies in financial difficulties need to make hard decisions regarding the management of the business of the company and the treatment of creditors. This note suggests a number of practical steps to be taken to minimise the risks which arise in these circumstances. This note is not comprehensive, and highlights only a few of the relevant factors.

As soon as a director becomes aware that the company is in financial difficulties, he should raise the problem with the board and the board must seek independent professional advice. The directors must take every step to minimise the potential losses to the company. Directors will be subject to penalties and required to compensate creditors for loss suffered as a result of trading the company when it becomes clear that there was no reasonable prospect of the company avoiding insolvency. A...