Dissolving a Company to avoid paying debts? New legislation to pursue Directors personally

Dec 17, 2021

Dissolving a Company to avoid paying debts? New legislation to pursue Directors personally - ICS

Back in May we published an article advising that the Insolvency Service was due to be given new powers to investigate director conduct after strike off.

On 15 December 2021 the relevant legislation received Royal Assent, operating retrospectively, extending the Insolvency Service’s powers to pursue directors who abuse the company dissolution process.

What does this mean?

Previously the Insolvency Service could only take investigative action against directors following their company being subject to Liquidation or Administration (or live companies where there is evidence of wrongdoing). Therefore, directors of companies who were able to strike off and dissolve, avoiding an insolvency process, were out of reach from the Insolvency Service’s investigatory powers.

The new legislation gives the Insolvency Service the powers to directly: -

  • Investigate director conduct on companies which have been dissolved
  • Bring disqualification action under the Company Directors Disqualification Act (CDDA)
  • Issue proceedings against the more serious of cases
  • Apply to Court for a Compensation Order, personally payable by the director, for the benefit of creditors who have lost out due to their fraudulent behaviour

As the powers apply retrospectively, all current and future dissolved companies are caught by the legislation.

Contact Us

With the introduction of this new legislation, it is so important that early advice is taken when a business is in financial difficulty. There are many pitfalls which an “unadvised” director could fall down which could cause significant personal liability consequences. Here at ICS, our licensed and regulated IPs provide initial advice completely free of charge and without obligation as well as in the strictest of confidence, always.

If you would like to speak with one of the licensed and regulated IPs at ICS, here are their direct contact details, please feel free to get in touch anytime, wherever you are in the UK: -

Tom – 07795 196619 or tom.bowes@idealcs.co.uk

Andy – 07812 338252 or andrew.rosler@idealcs.co.uk


The Government’s Press Release, Crackdown on directors who dissolve companies to evade debts: -


Our May 2021 Article regarding the new powers for the Insolvency Service: -