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Frequently Asked Questions


You can be held personally liable for company debts where you have given an enforceable personal guarantee. Equally, a liquidator has the ability to “Lift the corporate veil” and hold you liable for any losses suffered as a result of any breach of duty.

Should you owe your company money this is a debt you will be asked to repay.

A bounce back loan is an unsecured debt in a liquidation. A director is not personally liable except where it can be proven the original application was incorrect or where the loan funds have been used for personal use.

A director must act for the company creditors as a whole. If the company is insolvent, directors should seek advice from an insolvency practitioner before proceeding.

Employees are protected (with some limitation) under the Employment Rights Act. Their employment entitlements will be considered for payment by the Redundancy Payment Service to replace them as creditors in the insolvency process.

A company entering into an insolvency event does not automatically disqualify a director. Director disqualification can only occur if a director is subject to post insolvency disqualification proceedings, an order of the Magistrates’ Court or a director becomes subject to bankruptcy.

PBC can either provide some guidance in terms of the claim being made.  Alternatively, PBC provide a mediation service with our CEDR accredited mediator.

If the purpose(s) of a solvent company have ended (whether a specific purpose or director retirement) and the asset base exceeds £25,000 then you can resolve to wind down its affairs in a tax efficient manner by way of a members voluntary liquidation (“MVL”).

Unfortunately, redundancy is an inevitable aspect of a company entering into an insolvency process.  This article aims to clarify the four main claims employees can make against the company, most if not all will be paid by a government department called the Redundancy Payments Service (“RPS”)

The claim to the RPS is completed online and the insolvency practitioner acting in relation to the company will provide details on how to apply, what information the employees will require, and a case reference number.  In a recent change to the process, this code cannot be obtained by the insolvency practitioner until after the company enters into the insolvency process and this may be up to three weeks after being made redundant.

All claims paid by the RPS are subject to a weekly limit which changes every 6 April.  The current limit which runs from 6th April 2024 to 5 April 2025 is £700.00. 

Wages – Arrears of Pay

An employee can claim up to 8 weeks arrears of pay, based on their weekly salary rate, subject to the weekly limit referred to above.  If an employee is owed more than 8 weeks, the best 8 weeks can be chosen.  Tax and national insurance will be deducted before the payment is made.

Holiday Pay

An employee can claim for holiday pay taken but not paid and accrued holiday which has not been taken.  For the purposes of these calculations, an employee’s holiday entitlement (including bank holidays) is taken to have accrued evenly since the start of the holiday year. 

For example if an employee who had 20 days holiday plus bank holidays was made redundant after three months of their holiday year, they would have accrued a quarter of the 28 days (i.e. 7).  If the employee had taken less days than this (including bank holidays) they would be able to make a claim for the remainder.  Should the employee have taken more, it is unlikely they will be made to repay the difference.

Holiday pay claims can be for a maximum of 6 weeks, again capped at the weekly limit and tax and national insurance is deducted.

Redundancy Pay

An employee can claim for redundancy if they have worked for the Company for more than 2 years. The amount that can be claimed depends on the employee’s length of service and age.

  • Each complete year aged 18 – 22 equals half a week’s wage per year.
  • Each complete year aged 22 – 41 equals 1 week’s wage per year.
  • Each complete year aged over 41 equals 1.5 week’s wage per year.

Again the employee’s wage is capped at the weekly limit but here unlike wages and holiday pay, this is paid tax-free.

Pay in Lieu of Notice.

If a company which was continuing to trade were to make certain employees redundant, the company would be required by law to give the relevant employees notice of their redundancy and pay the employee their weekly wage during this period.  It is likely that in an insolvency process this notice will not be given and therefore the employee can claim for the wages they would have received.

The statutory notice period is one week per years’ service (from a minimum service of 1 month) up to a maximum of 12 weeks.

Employees should note that this claim is a compensation claim and is based on what happens during the employee’s notice period.  At the end of the relevant period, the employee will be invited by the RPS to complete a further online form detailing their earnings (or more importantly their potential earnings) in the period.  Therefore, if the employee starts a new job during their notice period, this income will reduce their claim.  Furthermore, all employees who are made redundant are likely to be entitled to benefits including job seekers allowance.  The RPS will deduct these benefits from this claim even if they are not claimed so our advice to any employee in this situation is to claim as soon as possible.

It is important to note that this article refers to the claim an employee can make against the RPS.  This is the most likely method for being paid and certainly the quickest.  Where an employee is paid more than the weekly limit or has extra entitlements above the statutory limits referred to above in their contract, they will have surplus claims which can still be made against the company in liquidation.  However, here, payment is dependent upon realisations in the liquidation and will therefore be uncertain.

The published guidance from RPS is they aim to pay the claims within six weeks so if this delay will result in financial pressure for you our advice is to contact your creditors and explain you have been made redundant.

If any employee who has been made redundant has any queries regarding the above they should contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton),  01908 488653 (Milton Keynes) or email to  Alternatively, visit for further information.


Bankruptcy is a statutory procedure where a trustee in bankruptcy takes control of your assets and liabilities, subject to some exceptions.  Either someone who you owe money can petition for your bankruptcy or you can apply to make yourself bankrupt.

A trustee in bankruptcy must “Deal” with your beneficial interest in the dwelling property within 3 years of the bankruptcy commencing.  This can be achieved by either you/the joint owner agreeing to place the property on the market for sale, or a third party making an offer or the trustee seeking an order for possession and sale.

In most cases, you are discharged after 1-year.  However, your discharge can be suspended or, for any wrongdoing you could be subject to a bankruptcy restrictions order or undertaking that can last between 2 – 15 years. 

An individual voluntary arrangement (or IVA) is a legally binding agreement between an individual and their creditors.  The agreement sets out a payment plan to repay creditors either in full or an agreed percentage of their debts.

If you are made bankrupt then you are automatically disqualified from being a director of a company until discharged (see “How long does bankruptcy last?”)  If appropriate, an individual voluntary arrangement allows an individual to continue holding office as a director.

Bankruptcy or an individual voluntary arrangement deal with assets you own or have an interest in and debts where you are liable.  However, if your spouse has agreed to one of your debts being secured against your property, they are jointly liable for a debt or have acted as a guarantor then that creditor retains their rights against the spouse.


This will depend on your status as a creditor, in terms of whether you hold security or have supplied goods under retention of title, or some other service. PBC’s creditor services can advise and, where required, represent you.

A licensed insolvency practitioner has a duty to investigate the conduct of a bankrupt or the directors of an insolvent company.  These enquiries include investigating the movement of assets, particularly in the 2 years preceding insolvency.

There are many options that address personal insolvency, including bankruptcy and an individual voluntary arrangement. Subject to your asset and debt position there also some non-insolvency procedures, including the “Breathing Space” procedures.

Should the issue surround your company then there is a wide range of corporate options, designed to fit the circumstances surrounding your company.

Your first consultation with PBC is free of charge.  Should we be engaged to assist further then we shall agree a fee structure with you from the outset. If we are being appointed on a formal insolvency then our fees are usually covered by the realisable assets within the insolvency.