If you run a limited company, or sit on the board of one, you may worry that an IVA will force you to step down. In most cases it won’t. There is no law that bars someone in an IVA from being a company director in England, Wales or Northern Ireland.
That is one of the key differences from bankruptcy, where you can’t act as a director without the court’s permission. Even so, your company’s own rules, your lenders and your industry may set their own conditions.
The short answer
- An IVA doesn’t legally stop you being a company director.
- Bankruptcy is different: you can’t be a director without court permission while bankrupt.
- Check your company’s articles of association and any shareholder agreement.
- An IVA deals with personal debts. Company debts belong to the company.
- Personal guarantees you’ve given for company borrowing can be included.
Why an IVA doesn't stop you being a director
The legal ban on acting as a director applies to people who are bankrupt, subject to a bankruptcy restrictions order, or disqualified by the court. An IVA is a different procedure. It’s a formal agreement with your creditors, and it doesn’t carry an automatic restriction on running a company.
What should I check before starting an IVA?
- Your articles of association. Some companies’ articles say a director must step down if they make an arrangement with their creditors. Older or bespoke articles are more likely to include this.
- Shareholder or partnership agreements. These can contain similar clauses.
- Business lenders and suppliers. Finance agreements may require you to tell the lender. An IVA appears on your personal credit file, which can affect credit checks on you.
- Regulated roles. Some industries, such as financial services, have fitness and propriety rules. Check what applies to your role.
How does director's income work in an IVA?
Your IVA payment is based on your personal income, including salary and dividends you take from the company. Your insolvency practitioner will usually want to see company accounts or bank statements so the figures are clear. Paying yourself less to reduce your IVA payment isn’t allowed, and income is checked at each annual review.
What about personal guarantees?
If you personally guaranteed a company loan or overdraft, and the company can’t pay, the lender can come to you. That personal guarantee liability is a personal debt and can usually be included in an IVA. The company’s own debts can’t, because the company is a separate legal person.
Common questions
Can I start a new limited company during an IVA?
Usually yes, as an IVA doesn’t ban you from being a director. You should tell your insolvency practitioner, because a change in how you earn your income will affect your IVA payments.
Will Companies House show my IVA?
No. Companies House records directors, not personal insolvency. Your IVA appears on your credit file and on the public Individual Insolvency Register while it runs.
Can company debts go into my IVA?
No. A limited company’s debts belong to the company. Only personal debts, such as personal guarantees you’ve signed, can be included in your IVA.
Can I be a director if I go bankrupt instead?
Not without the court’s permission. Acting as a director while bankrupt is a criminal offence, which is one reason directors often look at an IVA instead.
How IVA Advice Online can help
Every situation is different, and an IVA isn’t right for everyone. We can look at your income, spending and debts with you and set out the debt solutions you could qualify for, including options other than an IVA. To talk it through, get in touch.