News Article - 16 December 2008
Category:

The directors of companies cannot be pursued for losses by creditors should a firm become insolvent.

Although there has been a rise in the number of firms suffering from insolvency over recent months, the rules surrounding failed companies have not changed.

Firms that have failed to control costs and as a result have let their business plans suffer should be aware that although all business assets will be used to pay creditors, the directors of a firm cannot be pursued without prior court permission.

A spokesperson for the Insolvency Service highlighted that any further legal action against a firm cannot be carried out once a company formally enters the insolvency process.

She said that either the Official Receiver at a private insolvency practitioner will handle all aspects of an estate and will inform creditors if they can expect to get any money back - as well as how much they will receive.

Earlier this year, figures from the Insolvency Service showed that the number of firms going bust increased by 26.3 per cent between July and September compared to the same period last year.

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