Am I liable for company debts after resigning as a director

Q: Can I be sued for past breaches of duty?

Yes. Three routes reach former directors expressly: Misfeasance. Section 212 of the Insolvency Act 1986 applies in a winding up to anyone who is or has been an officer and who has misapplied or retained company money or property or breached a fiduciary or other duty. The court can order repayment with interest or compensation, on the application of the liquidator, the official receiver, a creditor or (with leave) a contributory. See misfeasance claims. Derivative claims. While the company is solvent, a shareholder can bring a derivative claim under section 260 of the Companies Act 2006, and for this purpose "director" includes a former director. Claims by the company itself. Section 178 makes the general duties enforceable in the same way as other fiduciary duties (apart from the duty of care). Time limits vary with the claim. Section 21 of the Limitation Act 1980 sets six years for actions for breach of trust, but no limit for actions in respect of fraud by a trustee or to recover trust property, or its proceeds, still held or received by the trustee. Where a claim is brought, section 1157 of the Companies Act 2006 lets the court relieve an officer wholly or partly if they acted honestly and reasonably and ought fairly to be excused.

Q: Which other look back periods apply?

ProvisionWho it catchesWindow Prohibited names, Insolvency Act 1986 s216Anyone who was a director in the 12 months ending the day before insolvent liquidationRestriction lasts 5 years from liquidation; s217 adds personal liability for debts incurred in breach Payment out of capital for share buyback, s76Directors who signed the solvency statementWinding up beginning within one year of the payment Preferences and undervalue transactions, ss238 to 240Preferences to connected persons, including directors, and undervalue transactions with anyone2 years before onset of insolvency (6 months for preferences to unconnected persons) NIC personal liability notice, SSAA 1992 s121CIndividuals who were officers at the time of the fraud or neglectTurns on when the failure occurred Deliberate inaccuracy penalty, FA 2007 Sch 24 para 19An officer to whom the inaccuracy was attributablePortion specified by HMRC, payable within 30 days of notice If you resigned more than 12 months before the liquidation, section 216 does not apply to you, because it looks only at directors in that 12 month window.

Resigning stops you taking part in future decisions, but it does not wipe out liability for what happened while you were a director. Personal guarantees carry on under their own terms, a liquidator can look back over your whole time in office for wrongful trading and misfeasance, payments to you can be reversed if made within the statutory look back periods, and disqualification proceedings can be brought within three years of the company’s insolvency or dissolution even though you left earlier.

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What does resigning actually end?

Under the model articles, you stop being a director once the company receives your notice and the resignation takes effect in accordance with its terms (article 18(f)). The company must then notify Companies House within 14 days under section 167G of the Companies Act 2006. From that date you are no longer part of the board’s decisions and do not owe most of the general duties for the future.

What it does not end is responsibility for the past. The Insolvency Service’s director information hub states that you remain responsible for decisions and actions taken while you were a director, even after you resign or sell the company, and that it can investigate the conduct of all directors of an insolvent or dissolved company, including those who have resigned. The mechanics of leaving are covered in resigning as a company director; this page looks at how long the exposure lasts.

Do personal guarantees end when I resign?

Not automatically. The Insolvency Service explains that a director is responsible for any money owed by the company that they have personally guaranteed, giving a finance agreement, overdraft or bank loan as examples. A guarantee is your own contract with the lender or landlord. Ceasing to be a director does not release it unless its terms say so or the creditor agrees. Read the guarantee for any right to end it for future borrowing, and ask the creditor for a written release; without one, you can be pursued for the guaranteed debt if the company later defaults, however long ago you left. See directors’ personal guarantees.

Clearing a guaranteed debt on your way out carries its own risk. Section 239 of the Insolvency Act 1986 covers preferences to creditors and to sureties or guarantors of the company’s debts, and section 240 sets the look back at two years before the onset of insolvency for a person connected with the company, against six months for others. A director is a connected person under section 249, and section 239(6) presumes that a preference to someone connected at the time it was given was influenced by a desire to prefer them.

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How far back can wrongful trading reach?

Section 214 applies to a person who “is or has been” a director. There is no fixed look back period. The question is whether, at some time before the winding up began, you knew or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation or insolvent administration, and whether you were a director at that time (section 214(2)).

That makes the timing of your resignation relevant in one specific way. If you left before that point was reached, section 214 does not apply to you. If you were still on the board when it was reached, leaving afterwards does not help unless you can show you took every step to minimise the potential loss to creditors that you ought to have taken (section 214(3)). See wrongful trading and director liability.

Can I be sued for past breaches of duty?

Yes. Three routes reach former directors expressly:

Misfeasance. Section 212 of the Insolvency Act 1986 applies in a winding up to anyone who is or has been an officer and who has misapplied or retained company money or property or breached a fiduciary or other duty. The court can order repayment with interest or compensation, on the application of the liquidator, the official receiver, a creditor or (with leave) a contributory. See misfeasance claims.
Derivative claims. While the company is solvent, a shareholder can bring a derivative claim under section 260 of the Companies Act 2006, and for this purpose “director” includes a former director.
Claims by the company itself. Section 178 makes the general duties enforceable in the same way as other fiduciary duties (apart from the duty of care).

Time limits vary with the claim. Section 21 of the Limitation Act 1980 sets six years for actions for breach of trust, but no limit for actions in respect of fraud by a trustee or to recover trust property, or its proceeds, still held or received by the trustee. Where a claim is brought, section 1157 of the Companies Act 2006 lets the court relieve an officer wholly or partly if they acted honestly and reasonably and ought fairly to be excused.

Can I still be disqualified after resigning?

Yes. Under section 6 of the Company Directors Disqualification Act 1986, the court must disqualify a person who is or has been a director of a company that has become insolvent, whether while they were a director or subsequently, or who has been a director of a company dissolved without becoming insolvent, if their conduct as a director makes them unfit. The period is between 2 and 15 years.

Section 7(2) requires the application to be made within three years of the day the company became insolvent or was dissolved, unless the court gives leave. That clock runs from the company’s insolvency, not from your resignation. If you are disqualified, section 15A allows a compensation order where your conduct caused loss to creditors, applied for within two years of the order or undertaking. For dissolved companies, an application to restore the company to the register can generally be made up to six years after dissolution (section 1030(4)), which can reopen the company’s affairs. See dissolved company director investigations.

Which other look back periods apply?

Provision	Who it catches	Window
Prohibited names, Insolvency Act 1986 s216	Anyone who was a director in the 12 months ending the day before insolvent liquidation	Restriction lasts 5 years from liquidation; s217 adds personal liability for debts incurred in breach
Payment out of capital for share buyback, s76	Directors who signed the solvency statement	Winding up beginning within one year of the payment
Preferences and undervalue transactions, ss238 to 240	Preferences to connected persons, including directors, and undervalue transactions with anyone	2 years before onset of insolvency (6 months for preferences to unconnected persons)
NIC personal liability notice, SSAA 1992 s121C	Individuals who were officers at the time of the fraud or neglect	Turns on when the failure occurred
Deliberate inaccuracy penalty, FA 2007 Sch 24 para 19	An officer to whom the inaccuracy was attributable	Portion specified by HMRC, payable within 30 days of notice

If you resigned more than 12 months before the liquidation, section 216 does not apply to you, because it looks only at directors in that 12 month window.

How does this work in practice?

Illustration only. Kate was a director of Fenwick Ltd until she resigned on 31 March 2025, having guaranteed its overdraft. In January 2025 the company repaid a £10,000 loan she had made to it. Fenwick goes into insolvent liquidation on 30 September 2026.

Guarantee: the bank can still call on it; her resignation did not release it.
Loan repayment: it was made within two years of the onset of insolvency while she was a director, so if the company was then unable to pay its debts the liquidator can challenge it as a preference, helped by the statutory presumption.
Wrongful trading: she is exposed only if the point of no reasonable prospect was reached before 31 March 2025.
Prohibited names: she left 18 months before liquidation, outside the 12 month window, so section 216 does not restrict her.
Disqualification: the Secretary of State has until 29 September 2029 to apply without leave.

What mistakes do former directors make?

Assuming that a filed resignation ends a personal guarantee.
Arranging repayment of their own loan or guaranteed debt just before leaving a struggling company.
Resigning without recording concerns about solvency, leaving no evidence of the steps they took.
Throwing away board papers, which may be needed to answer a liquidator or the Insolvency Service years later.
Continuing to run the business informally after resigning, which can make them a de facto or shadow director again.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.