A personal insolvency agreement may affect the director role you intend to keep
Assess company-director eligibility and governance continuity before choosing a personal insolvency agreement, avoiding the assumption that avoiding bankruptcy preserves management authority.
Corporate Recovery Partners
01 / 06
Avoiding bankruptcy does not answer the company-role question
You are considering a personal insolvency agreement and expect to keep managing a company throughout. Tell your adviser about that role before choosing the process. A personal debt option can have consequences beyond the payment schedule. Do not assume that because it is described as an alternative to bankruptcy, every existing business role can continue unchanged.
Identify each company, your formal appointments and the management work you perform. Include roles where you rarely attend meetings but remain registered. Give the adviser accurate details rather than describing yourself only as an employee or owner. Those descriptions may not capture the legal position that needs assessment before the proposed personal arrangement proceeds.
AFSA's comparison says a person in a personal insolvency agreement cannot be a company director or manager until its terms are fully complied with. Obtain advice about the application to your circumstances and any lawful options. Do not treat the general comparison as a complete assessment of the timing, exceptions or steps required in a particular case.
Imagine a sole director proposing a personal arrangement while the company expects that person to approve finance and sign new contracts next month. The proposal's contribution might look affordable, but the governance plan has not been examined. The example does not prescribe a replacement appointment; it shows why the company-role consequence must be considered before the financial option is selected.
Ask the relevant advisers what the company would need to do and when, including any approval or reporting requirements. A nominal replacement should not be used to disguise continued management contrary to a restriction. Keep personal-debt advice and company-governance advice coordinated while recognising that the interests involved may require separate representation or decisions.
Include the verified governance consequences beside the proposal's funding, cost and other effects. Do not decide solely on the amount creditors might accept. If the role cannot continue as expected, assess the practical alternatives before making commitments. An informed personal insolvency choice needs to account for how the company will be managed lawfully, not simply how the personal debts might be paid.
