When a company goes into liquidation or administration, one of the key legal steps that follows is the director’s conduct report. It’s a confidential document that the insolvency practitioner must submit to the Insolvency Service, summarising how the directors behaved before the company failed.
It’s not designed to punish directors automatically. Instead, it helps the government assess whether directors acted properly, met their legal duties and whether any further action is needed. Most reports are routine but they matter because they protect both creditors and the integrity of UK businesses.
Why the conduct report exists
When a business becomes insolvent, creditors often lose money. The Insolvency Service uses the conduct report system to make sure company directors haven’t:
- Broken the law
- Misused company money or assets
- Ignored warning signs of insolvency
- Favoured certain creditors over others or made a preference payment
Every director of a liquidated or administrated company will have a conduct report completed about them. It’s a standard part of the process and required by law under the Company Directors Disqualification Act 1986.
Who completes the report and what it includes
The licensed insolvency practitioner handling your liquidation or administration must submit the report within three months of appointment. It goes directly to the Insolvency Service and isn’t made public.
The report typically includes:
- Background details of the company
- A timeline of trading and key decisions before insolvency
- The causes of the company’s failure
- Details of the directors and their roles
- Any signs of misconduct or poor decision-making
The insolvency practitioner must also comment on how directors cooperated during the process: whether they provided records, communicated openly, and complied with requests for information. If you’ve been open, honest and proactive, that will be reflected.
What the Insolvency Service looks for
The Insolvency Service reviews each report to identify whether there’s evidence of unfit conduct. This could include:
- Trading while insolvent or taking on new debts knowing they couldn’t be paid
- Paying certain creditors ahead of others (known as preferential payments)
- Withdrawing excessive directors’ loans or dividends
- Failing to keep or deliver up proper accounting records
- Misusing Bounce Back Loan funds
- Ignoring HMRC liabilities or compliance obligations
If there are no concerns, the report simply closes. Most directors never hear another word about it.
What happens if concerns are raised
If the Insolvency Service believes misconduct might have occurred, it can begin a further investigation. The potential outcomes vary depending on what’s found:
- No further action: The majority of cases fall into this category
- Director disqualification proceedings: If unfit conduct is proven, director’s disqualification can mean being banned from managing or forming a company for up to 15 years
- Civil recovery: The Insolvency Service may apply to recover company funds from directors personally, but this only happens where clear wrongdoing is found
These are relatively rare outcomes. As long as directors have acted responsibly and taken advice once problems arose, the report usually poses no threat.
How to ensure your conduct stands up to review
If your company is struggling or already insolvent, you can take practical steps to protect yourself long before a conduct report is written:
- Keep accurate financial records and make sure they’re up to date
- Act quickly if you suspect insolvency — don’t wait for creditors to escalate
- Seek advice early from a licensed insolvency practitioner, rather than trading on and hoping for the best
- Avoid preferential payments to friends, family or specific creditors
- Stop taking dividends or drawings once the company can’t meet its debts
- Be transparent about what’s happening — honesty always counts in your favour
Demonstrating that you sought professional advice and acted with creditors’ interests in mind is one of the strongest defences a director can have.
How long does the process take?
The conduct report is usually submitted within three months of liquidation or administration beginning. If the Insolvency Service decides to investigate further, that can extend the timeline, but most directors never experience delays or hearings.
In many cases, the Insolvency Service confirms there’s no cause for concern within months, allowing directors to move forward and even start new ventures.
Does a conduct report stop you being a director again?
No — not automatically. Only if the Insolvency Service finds evidence of unfit conduct and a court orders disqualification will you be restricted from future directorships.
For directors who’ve acted properly and cooperated with their insolvency practitioner, there’s no barrier to setting up or managing another company.
If you’re worried about what your conduct report might say
If you’re considering liquidation and are concerned about how past decisions might look, the best approach is to talk openly with a licensed insolvency practitioner before the process begins. They can help you:
- Understand what will be reviewed and why
- Identify any potential issues early
- Take corrective steps or gather supporting information
- Manage communications with creditors and the Insolvency Service
Early advice can make all the difference between a straightforward report and a stressful one.
Key takeaways: what is a director’s conduct report
- A director’s conduct report is a legal requirement after liquidation or administration.
- It’s confidential, sent by your insolvency practitioner to the Insolvency Service.
- Its purpose is to protect creditors and ensure fair conduct, not to punish honest directors.
- Most reports close without action if directors have acted responsibly.
- Taking early advice and being transparent are the best ways to protect yourself.
Get advice on your director’s conduct report
If you’re preparing for liquidation and worried about how your actions could be viewed, we can help. Our licensed insolvency practitioners will explain what the conduct report involves, guide you through your duties, and ensure everything is handled properly from the start.
Every situation is different. But in most cases, the process is far less daunting than directors expect. Contact us today for free, confidential advice and get clarity on your next steps.
