What are a director’s main duties when their company is insolvent?

When a company becomes insolvent, directors’ duties shift from prioritising shareholders to protecting creditors. This means directors must avoid taking actions that worsen creditor losses, such as incurring unnecessary debts, making preferential payments, or disposing of assets below value. They must keep accurate records, maintain transparency, and seek professional insolvency advice at the earliest sign of financial distress. Directors also have a duty to cooperate with insolvency practitioners once formal procedures begin, providing access to books, records, and information. If they breach these duties, they risk personal liability for company debts, disqualification from serving as directors, and reputational damage. In short, directors must act with honesty, fairness, and diligence, putting creditor interests above their own. Failure to do so can result in severe legal and financial consequences.