Todd Davison, managing director at Purbeck Insurance Services, was left concerned about the rise in CVL’s in July in the latest Insolvency Service figures.
He said: “The 10 per cent rise in creditors’ voluntary liquidations in July, from June is concerning – every CVL is a director who has reached the end of the road and taken the very difficult decision to close down their business.
“In most cases, the cost of doing business has just become too much and that decision will ripple through their lives, the people they employ and the communities in which they operate.
“A CVL can also make the director personally liable for any debt their business may owe, if they have given personal guarantees to secure finance, lease premises, or keep suppliers on side while trying to keep the business trading.
“Insolvency wipes out the company’s liability, not the director’s.
“The analysis correlates to our own experiences in helping directors to navigate their PG obligations following CVLs and we know from our data that most loans by small businesses right now are simply to ‘keep the lights on’.
“These figures are a timely reminder for any director relying on personal guarantees to understand exactly what they’ve signed up to, and to consider whether that risk is protected.”
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