How do I know if I've done everything I legally could as a director?

Assessing whether you've fulfilled your legal duties as a director requires reviewing your actions against the standards set in the Companies Act 2006 and insolvency law, particularly once financial difficulties emerged. Directors are judged by the standard of what a reasonably diligent person with your knowledge, skill, and experience would have done in the same circumstances. Here are the key questions to ask yourself: Did you act in the company's best interests throughout and then shift to prioritizing creditors' interests once insolvency became likely? Did you maintain accurate financial records and ensure you understood the company's true financial position at all times? Did you seek professional advice promptly when serious financial difficulties emerged, or did you delay until options were severely limited? Did you stop incurring new debts once it became clear the company probably couldn't pay them? Have you avoided preferring certain creditors over others without legitimate business justification, particularly connected parties? Did you ensure company assets were preserved and not disposed of at undervalue or transferred improperly? Have you cooperated fully with any insolvency practitioners, liquidators, or investigators rather than obstructing or concealing information? Did you maintain proper board meetings and document significant decisions, particularly those relating to financial difficulties? Have you avoided fraudulent or reckless conduct including false statements to creditors or falsifying records? If the company continued trading after insolvency became likely, can you demonstrate there were reasonable grounds to believe recovery was possible? Have you provided full disclosure of personal transactions with the company including director loan accounts? Did you raise concerns with fellow directors if you believed the company was insolvent or heading that direction? Have you avoided making unlawful distributions or paying dividends when the company couldn't afford them? If formal insolvency procedures began, have you provided all required information and assistance promptly? Positive indicators that you've acted properly include: documented board minutes showing regular financial review and discussion of difficulties; evidence of seeking professional advice from accountants or insolvency practitioners when problems emerged; clear records of decision-making showing you considered creditor interests; correspondence with major creditors showing honest communication; cessation of trading or seeking formal insolvency procedures once the position became clear; full cooperation with liquidators including prompt provision of information and records; and absence of personal benefit or preferential treatment during the distress period. Red flags suggesting potential issues include: gaps in financial records or missing documentation; continued trading for extended periods despite obvious insolvency; large payments to yourself or connected parties shortly before insolvency; asset disposals at questionable values; failure to seek advice despite clear warning signs; obstruction or delayed responses to liquidator requests; or creditor complaints about misleading information. If you're unsure, the best course is to seek legal advice from a solicitor specializing in director duties and insolvency—they can review your specific actions and advise whether you have exposure. An insolvency practitioner who has worked with your company can also provide perspective on whether your conduct appeared reasonable. Remember that perfection isn't the standard—directors are allowed to make business decisions that don't work out, and courts recognize that managing distressed companies involves difficult judgments. What matters is that you acted honestly, took reasonable steps to understand the situation, sought advice when appropriate, and prioritized creditors once insolvency was likely. If you made mistakes but acted in good faith throughout, this significantly reduces risk of personal liability. The directors who face serious consequences are typically those who engaged in clear misconduct, ignored obvious warning signs for extended periods, prioritized personal interests over creditors, or failed to cooperate with formal processes.