
The hidden struggles behind seasonal hospitality businesses.
7 August 2025
Who gets paid first in insolvency?
1 October 2025Running a business comes with highs and lows. When cash flow gets tight or creditors start applying pressure, even the most experienced directors can make rash decisions under stress.
At TruSolv, we often speak to directors who wish they’d sought advice sooner. In our experience, many of the issues they face could have been avoided with early action and a better understanding of their legal duties.
Here are five of the most costly mistakes directors make when their business is struggling — and what to do instead.
Five costly mistakes directors make when their business is struggling.
1. Ignoring the Problem
It’s understandable. When things are going wrong, it’s tempting to hope for a turnaround or wait for a large payment to come in. But delays often make things worse.
📉 The longer you wait, the fewer options are available.
⚠️ Directors have legal duties — including to protect creditor interests once a company is insolvent.
Do this instead:
Act quickly. Speak to your accountant or an insolvency practitioner as soon as cash flow issues begin to build.
2. Paying Some Creditors Over Others
Prioritising who gets paid may seem like the right move. Whether it’s a supplier you have a good relationship with, or one who’s putting you under pressure, just remember that making preferential payments can have serious legal consequences.
⚠️ Once a company is insolvent, all creditors must be treated fairly.
📜 Paying one over others may lead to director disqualification or claims against you personally.
Do this instead:
Get advice before making any repayments if your company is under financial pressure.
3. Using Personal Guarantees or Personal Funds
Understandably, directors want to protect their business. A lot of money and time has already gone into growing this business, and trying to keep it going. As tempting as it may be, offering a personal guarantee or using personal savings to cover company debts can put your own assets at risk.
🏠 You could be liable for debts personally, including from your home.
😓 It often creates more stress without solving the core issue.
Do this instead:
Explore safer solutions like Time to Pay arrangements or restructuring options that don’t jeopardise your personal finances.
4. Overdrawn Director’s Loan Accounts (DLAs)
If you’ve taken more out of the company than you’re entitled to, and it’s not classed as salary or a dividend, it may be recorded as an overdrawn director’s loan account.
💸 This becomes a debt you owe back to the company.
⚖️ In insolvency, you may be forced to repay this or face legal action.
Do this instead:
Review your DLA position regularly and get advice on how to resolve any overdrawn amounts. Check out this blog on Director’s Loan Accounts.
5. Moving or Selling Company Assets Improperly
Sometimes directors try to move or sell company assets (like vehicles or equipment) to raise cash or protect them from creditors. If these transactions aren’t at market value or properly documented, they can be challenged.
🚫 This could be classed as an antecedent transaction or even fraud.
📑 You may end up personally liable or disqualified from acting as a director.
Do this instead:
Always seek advice before making any asset transfers in a distressed business.
Get Advice Early.
If your company is under pressure, you’re not alone. The good news is that there are options — including recovery strategies that could save your business.
But the earlier you act, the more control you have over the outcome.
At TruSolv, we help directors make the right decisions at the right time — whether that’s rescuing the company, restructuring debt, or managing a controlled closure. Call 0808 196 8676 or email help@trusolv.co.uk.




