Personal guarantees can influence a director’s view of whether to continue

The disagreement may have a personal dimension

One director wants the company to close while another wants to keep trading. Their views may be influenced by different guarantees, loans or personal commitments. Give advisers that context without assuming either person is acting improperly. The company's options and each director's personal position need proper assessment, and an unspoken difference in exposure can make the discussion harder to resolve.

Describe the obligations accurately

Imagine two directors with equal shareholdings, but only one remembers signing a supplier guarantee. Gather the actual documents and current account information. Do not assume equal ownership means equal personal exposure. Ask each director to identify relevant commitments for advice, with appropriate handling of personal information and recognition that separate advisers may be needed.

Keep the company risk in view

ASIC advises directors to seek qualified advice promptly when insolvency is suspected. Provide the current financial position and proposed options alongside the personal exposure information. The need to protect a director's home or savings does not, by itself, establish that continued trading is appropriate. Ask the adviser to explain the company's position and relevant duties on the actual facts.

Source: ASIC: What to do if your company is insolvent

Avoid bargaining away an unexamined risk

In the equal-shareholder example, one director may offer to continue only if the other takes over a personal commitment. Have any proposal assessed independently. Do not assume a private promise changes the creditor's rights or that a transfer can be completed without further agreement. Keep the commercial proposal separate from any conclusion about whether the company can meet its debts.

Use separate decision questions

Ask what course is appropriate for the company, what personal obligations remain under each scenario and what agreements would be needed for any proposed change. Record uncertainty rather than forcing every issue into a single vote about staying open. Where interests conflict, obtain advice on governance and representation instead of asking one adviser to ignore the difference.

Document the basis for the outcome

Keep the relevant advice, authorised decisions and actions required. Avoid describing the result as a victory for the more exposed director or a punishment for the other. The practical aim is an informed assessment that makes personal pressures visible without allowing them to replace the evidence about the company's future and obligations.