In our column this week, Keith O’Donovan of O’Donovan Lavin Accountants & Business Advisors discusses The Liquidation process, Safeguards for Company Directors in an Insolvency situation and the process of restoring a Company after liquidation or strike-off:

Following on from the first part of this discussion, I would like to bring to the reader’s attention, the Liquidation process of terminating a business in Ireland.


A Company can be liquidated by; (i) the Members, (ii) the Creditors or (iii) the Order of the Court. All three methods ultimately result in the same conclusion, the dissolution of the Company. The individual circumstances of the Company will influence which method of liquidation is put into operation.

In essence, once the Liquidator has been appointed to the Company, he/she must collect and realise all of the assets of the Company, apply the proceeds in satisfaction of his own costs and expenses, procure the payment of creditors in full and the payment of the balance, if any, to the members. The Liquidator has also got a responsibility to produce a Section 56 Report (findings into the demise of the Company) to the Director of Corporate Enforcement on the six month anniversary of the Company being placed into liquidation. If it transpires in the investigation process that the Directors are guilty of conduct such as fraudulent or reckless trading, failure to keep proper books & records, etc. , the Directors may be made personally liable for the debts of the Company.

Directors often encounter various predicaments when faced with the potential uncertainty of insolvency. I have put together a few points which will assist any Director in the conduct of their duties at all times should the situation arise:

  1. Ensure to act honestly, responsibly and exercise your powers in good faith and in the best interests of the Company.
  2. As an officer of the Company, always carry out your functions as Director with due care, skill and diligence.
  3. Always maintain proper books and records on a continuous and consistent basis as otherwise, this may work against you when investigations into the demise of the Company are being carried out.
  4. Ensure annual accounts are prepared from the information contained in the Company’s books of account and other relevant information.
  5. Always maintain and file relevant returns with the Companies Registration Office (CRO) and the Revenue Commissioners.
  6. Ensure Annual and Extraordinary General Meetings are convened when necessary and keep appropriate minutes of same.
  7. Never make a secret profit from your position unless it is disclosed to the Company.
  8. There is a fiduciary relationship between a Company and its Directors. Therefore, you are required by law to disclose your own personal interests in any contracts entered into by the Company and such a disclosure should always be recorded in the minutes of any meetings concerned.
  9. Ensure that you do not carry out any reckless or fraudulent trading as to do so, you may be held personally liable for some or all debts of the Company and/or receive a criminal record.
  10. Under Company law, a Company is forbidden from entering into certain transactions with any of its Directors or individuals connected to its Directors.
  11. Always co-operate with the Liquidator, Receiver or Examiner, as appointed.

In addition to the above points, it has become common practice nowadays that Personal or Credit Guarantees are sought of Directors from Banks, Landlords, Leasing Companies and Essential Suppliers when entering into various contracts on behalf of the Company. There are a number of points which can be seen below which I would like to bring to the reader’s attention in relation to this matter as failure to recognise or understand certain terminology within these arrangements, may have future implications for you personally as Company Director or indeed, the Company itself.

Personal Guarantees are not required for customers who are individuals as the debt is in their personal name. Should you supply goods to a Limited Company and wish to safeguard your goods in the event of non-payment by that Company, you may request a Personal Guarantee from the Directors. This is particularly useful if the Company has sold the goods on to a third party without paying you for the goods.

Through the difficult times of the past number of years and as people become more frugal going forward, all Directors need to fully understand the consequences of actions taken by them when dealing with a Company’s debt and their personal exposure to same.

Prior to the Credit Crunch when Companies were convinced that “getting bigger faster” was the right thing to do, bank finance was obtained rather than progressing at a rate that was financeable from the Company’s own resources. With such finance it was common practice for banks to require Company Directors to give Personal Guarantees in respect of the Company’s loans.

Where a Director’s guarantee is given, they become personally responsible to repay the loan. As such, the bank with whom the guarantee was executed, will be entitled to go after the Director at the same time as taking action against the Company.

In general, one should consider the potential future implications of providing a Personal Guarantee, as to do so, may have implications for a Directors own personal wealth and their family’s future.


After strike-off has been initiated and before the Company is actually struck off and dissolved, the public records of the Companies Registration Office (CRO) will show the status of the Company as “Strike-Off Listed”. During this period, a Creditor of the Company can notify the CRO of the Company’s outstanding debt and request that the Company be removed from the Strike-off list for a period of six months in order to provide the Creditor with the opportunity to recover the debt. At the end of the six month period, a Creditor can renew its request if monies remain outstanding. This request will be facilitated by the CRO if the Creditor in question can demonstrate to them that it is making reasonable efforts to settle the debt.

Following Strike-off, a Company has a twelve month window to apply to the CRO for its restoration to the Register after which it can only be restored by application to the Court. Following the Liquidation process, a Court order is necessary to restore the Company and must be applied for within two years of the anniversary of the dissolution of the Company.

Call us today if you would like additional information in relation to any of the above or you require any other business or financial assistance