Financial impact of failure on directors

Author: Henry Shinners, James Kirk (

Categories: Business risk, Consequences of Failure
Tags: Business failure, directors, Directors Liabilities, failure, insovency, liabilities, penalties
There is a financial impact in the form of compensation payments for directors who trade past insolvency, as Henry Shinners discusses in this TV show.

Failure's financial impact

If a director behaves in a way that he or she shouldn’t, either trades a business for longer than they should when it is insolvent or causes themselves to be preferred. Then the penalties really are compensatory rather than penal. So the courts will often rule that the director should pay in to the insolvent estate, the amount equivalent to which they have denied it, by either worsening the company’s position through trading on while insolvent, or causing some kind of preference in their own favour.

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