When a company goes into liquidation, the director usually loses control of the business, must hand over records and assets, and has to cooperate with the liquidator. In some cases, the director can also face investigation and personal liability, especially if there was insolvent trading or a personal guarantee.

What changes immediately

Once a liquidator is appointed, the director can no longer run the company or make decisions for it. The liquidator takes over the company’s affairs, assets, and dealings with creditors.

The director is usually expected to:

  • Provide information, books, and records.
  • Answer questions from the liquidator or official receiver.
  • Help with locating assets and explaining business decisions.

Personal risk

A company’s debts do not automatically become the director’s personal debts, but there are important exceptions. A director may be personally liable if they gave a personal guarantee, or if they allowed the company to trade while insolvent.

In insolvency cases, authorities may also investigate whether the director breached duties, and serious misconduct can lead to disqualification or other consequences.

Practical effect

In plain terms, liquidation usually means the director’s role becomes passive rather than managerial. They are no longer “in charge”; instead, they must assist the person handling the winding-up process.

If the director acted properly and did not give personal guarantees, they are often not personally responsible for unpaid company debts.

Summary

  • Control shifts from the director to the liquidator.
  • The director must cooperate and provide documents.
  • Personal liability can still arise in some situations.
  • Misconduct may trigger investigation or disqualification.

TL;DR: a director of a company in liquidation usually loses control of the company, must assist the liquidator, and may face personal risk only in certain situations such as guarantees or wrongdoing.