The appointed liquidator will produce a report on the general conduct of the directors who have been responsible for running the business. This is called the directors disqualification report or D1 report.

The liquidator is required to report on any person who has acted as a director of the company for the past three (3) years or any person who seems to have acted in the capacity of a director although they may not be formally registered as such at Company’s House.

Wrongful Trading

If the liquidator finds that any director has knowingly allowed the company to trade while insolvent, then they could accuse the director of wrongful trading. If upheld, this could lead to the director being struck off of the register of directors and banned from being a director for up to 15 years.  

The director may also be held personally responsible for company debts incurred during the time that the director was aware that the company was trading when insolvent.

Note:
Very often a winding up order will be instigated by HM Revenue and Customs for the non payment of VAT and other company taxes. Where this is the case, the liquidator will look closely at the conduct of directors.