Wind Up Wind Down

Company debt does not automatically become a director's personal debt. Find out when personal liability may arise even where no personal surety has been signed.

Liquidation does not automatically cancel personal surety, but it does not necessarily mean you will personally pay the full company debt. Assets, recoverable debtors and creditor ranking can affect what remains owing.

f your company cannot pay SARS, the right solution depends on whether the problem is temporary or the business has become insolvent. Understand the options available before the debt becomes more difficult to resolve.

A company experiencing financial difficulty does not automatically make its directors personally liable for its debts. However, personal surety, reckless trading, SARS debt and certain transactions can create personal exposure. Understanding when company debt can become a director’s personal responsibility is an important first step when a business is facing insolvency.

What happens to personal assets during business liquidation in South Africa? Personal assets do not automatically form part of a company’s liquidation. However, if you signed personal surety and company assets cannot settle the debt, you may be personally liable for the shortfall.