Sole Director In An IVA: Can You Liquidate A Limited Company? No, a sole director in an IVA (Individual Voluntary Arrangement) cannot liquidate a company that is under the Model Articles.
The reason for this is because Article 18(c) of the Model Articles says that such a directorship is terminated upon the agreement being entered into:
18. A person ceases to be a director as soon as—
(c) a composition is made with that person’s creditors generally in satisfaction of that person’s debts;
The effect of this is that such a person or the Supervisor of the IVA (subject to their rights under their IVA) will have to either alone or with other shareholders (where applicable) need to appoint a new director who can then pass the Board Resolution to start the process to place the company into voluntary Liquidation such as Creditors Voluntary Liquidation or Members Voluntary Liquidation.
However, some companies may have different Articles from the Model Articles, which do not prohibit a director being in an IVA. You have to check the Articles to be sure of the position and any restrictions.
Can I Be A Director Of A Limited Company If I Am In An IVA?
You cannot be a director of a limited company whilst in an IVA if that company’s Articles are the Model Articles because of Model Article 18(c).
However, not all companies’ Articles will have this restriction, and it may well be possible to amend the Model Articles to remove the 18(c) restriction. In such circumstances, a director could well then be permitted to continue whilst being under an IVA.
Going Into An IVA?
If a director is anticipating entering an IVA and wishes or needs to continue running a limited company under the Model Articles, it would appear sensible to seek advice on amending the Articles to remove the Article 18(c) restriction.
