Creditors & Insolvency
If you’re facing the prospect of insolvency then it’s crucial to take action without delay. In that situation company directors need to take extra care since they might be personally liable for debts in certain circumstances and can even be disqualified. See below.
Firstly, when facing insolvency, try to obtain new financing and/or achieve a compromise with creditors, e.g. agreeing to extend or alter debt repayment obligations - survival of your business is usually their best chance of getting paid. If the situation is dire you might initiate voluntary liquidation proceedings before a creditor does.
Transactions favouring specific creditors can be invalidated and reversed by a court if they took place in a certain period before a company is wound up. Additionally in that situation, directors can face becoming personally liable for debts. See below for details.