Company insolvencies remained high in 2025, with 23,938 companies entering a formal process. For directors, this is not just background data. High insolvency activity means more Insolvency Service (‘IS’) investigations of Directorial conduct, more scrutiny, more director disqualification and more insolvency claims against Directors by Liquidators and Administrators. This article explains what the latest figures could mean for directors in 2026, why the risk environment remains challenging and how Neil Davies and Partners helps directors of insolvent companies facing investigations and scrutiny.
What do the latest corporate insolvency figures show?
The Gazette confirms that 23,938 companies entered insolvency in 2025. Creditors Voluntary Liquidations remained the most common procedure and compulsory liquidations reached their highest annual level since 2012.
These figures set the scene. The real issue for directors is the level of scrutiny that follows, because all formal insolvent liquidations trigger a mandatory review process by the IS which can lead to an investigation.
Why does this matter for directors?
High insolvency volumes usually mean more activity by liquidators, administrators and the Insolvency Service. Directors can expect continued scrutiny of:
- Decision making before insolvency
- Payments to creditors and dividend payments declared and/or made
- Use of company funds and company assets
- Record keeping
- Directors’ loan accounts
- Dealings with connected parties
Such scrutiny often leads to Director Disqualification investigations by the IS or insolvency claims from liquidators. These are serious and can have long term financial and wider consequences if not handled correctly for the Director personally.
What allegations do directors commonly face?
These are the allegation types we see most often in practice that can lead to director disqualification:
- Wrongful and Misfeasant trading
- Preferences
- Transactions at undervalue
- Misuse of Government Covid funding
- Failures in record keeping
- Misfeasance or breach of duty
- Overdrawn directors’ loan accounts
- Failure to file returns or pay taxes
- Improper payment of dividends
Directors often face these allegations even when they acted reasonably and in good faith.
How does NDP help directors?
NDP represents and defends directors facing:
- Director Disqualification investigations (and permission to act applications)
- Claims brought by liquidators or administrators
- Allegations of breach of duty or misfeasance
- Claims relating to preferences or undervalue transactions
- Claims arising from directors’ loan accounts
Our approach is proactive and strategic. We focus on early intervention, controlling the narrative and resolving cases before they escalate. Directors come to us because they want experienced, specialist representation that protects their position and reduces risk.
What do recent clients say about NDP?
“Thank you, ND&P Solicitors, for your outstanding work and for making a positive difference in my life during a challenging time.”
“Their persistent and well-crafted representations made all the difference, ultimately securing a successful outcome in my favour.”
“I’m relieved and grateful to learn that the Insolvency Service do not intend to bring Director Disqualification proceedings.”
What practical steps should directors take when facing director disqualification allegations?
Every case turns on its individual facts, of course, but these general steps help directors demonstrate transparency, good faith and show that they are fulfilling their duties as directors:
- Keep financial records complete and up to date
- Document key decisions, especially around creditor payments
- Avoid selective payments unless legally required
- Seek early professional advice
- Cooperate with office holders
- Preserve all books, records and digital data
When should directors speak to NDP?
The current landscape is challenging. High insolvency volumes mean continued scrutiny, but, as the testimonials above show, directors can successfully defend allegations with specialist legal support. Early engagement improves outcomes and reduces risk. Speaking to us at the first sign of difficulty is always the safest option.
If you are a director of a company that is facing insolvency or you have already received an official letter from the Insolvency Service stating an intention to investigate you, please contact us immediately. The sooner you get in touch, the more we can do to help.
Frequently asked questions
What should I do if a liquidator contacts me?
Provide the information requested, keep a record of all communications and seek early advice if you are unsure about any aspect of the request.
What records will I be asked to provide?
Typically, financial records, bank statements, management accounts, invoices, contracts, payroll information and evidence of decision making.
What is a Director Disqualification investigation?
It is an investigation by the Insolvency Service into whether a director’s conduct makes them unfit to act as a director. It can lead to a ban of up to 15 years.
Can I defend a misfeasance claim?
Yes. Many claims can be defended or resolved through negotiation, evidence gathering or demonstrating that decisions were reasonable at the time.
What happens if I have an overdrawn director loan account?
Liquidators often seek repayment. The position can sometimes be negotiated depending on the circumstances and the evidence available.
When should I speak to a solicitor?
As soon as you become aware of potential issues. Early advice protects your position and reduces risk.
