Life After Liquidation: A Candid Interview with Sarah J Naylor
Liquidation is a path no director hopes to walk, yet thousands do every year, often for the first and only time in their business lives. It’s stressful, emotional and confusing and it can feel like stepping into a process you never expected to navigate.
To bring some clarity to that journey, Insolvency Practitioner Lisa Thomas sat down with coach and mentor Sarah J Naylor, whose HR and recruitment business entered liquidation in 2023. Although Lisa wasn’t involved in Sarah’s original liquidation, the two were able to reflect openly on what she experienced and what she wishes she’d known at the time.
Their conversation reveals the reality of insolvency: the pressures that lead up to it, the unexpected complications, and (most importantly) the relief and freedom that come afterwards.
Watch the full interview below…
When pressure builds: “You don’t know what you don’t know”
Sarah’s path to liquidation didn’t begin suddenly. It built slowly, over years. She’d been in recruitment since the late 1980s, surviving recessions and industry changes. She knew how to navigate tough trading conditions, but the combination of Brexit and COVID created a level of instability she had never seen before.
Her best trading year (2019 to 2020) was, as she describes it, “wiped absolutely clear” by the pandemic. Even after that, she kept going: keeping her full-time employee in place, cutting her salary and doing everything she could to trade through. But the knock-on effects lingered – recruitment freezes, unpredictable clients, and worsening cash flow as Bounce Back Loan repayments kicked in.
“I felt like I was rocking backwards and forwards,” she says, “trying to pay off old debt while new debt kept forming. You’re constantly pivoting, but you can’t get out of it.”
Even when a long-awaited invoice finally came in, the momentary relief didn’t last. Clients were freezing recruitment, the candidate market was shifting, and the business simply couldn’t regain momentum. She made her long-serving office manager redundant, hoping she could manage alone, but she “still wasn’t getting anywhere.”
Eventually, Sarah’s accountant told her she needed to speak to a licensed insolvency practitioner. “You don’t know what you don’t know,” she reflects now, “and when you find yourself there, you realise it’s not something you’re prepared for.”
Choosing the right route and understanding the process
When Sarah first reached out for help, she was entering a world she knew nothing about. She didn’t know what type of liquidation her business needed, what the process involved, or what questions to ask – a situation Lisa sees regularly.
To make sense of the decisions Sarah had faced at the time, Lisa explains that there are three main types of liquidation:
- Compulsory liquidation, and
Sarah’s company ultimately went through a CVL, a route chosen by the directors of an insolvent business and ratified by the shareholders.
Lisa sees this often: “Most directors have never faced insolvency before and hopefully they will only experience it once. They don’t have hindsight, they’re stressed, overwhelmed and relying entirely on the advice they’re given.”
For Sarah, that initial stage – taking advice, gathering information, providing documents – felt surprisingly quick. That speed can give the impression that the whole thing will be over just as fast. But that is only the preparation phase. Once the liquidator is formally appointed, most of the remaining process takes place quietly in the background unless specific issues arise.
The emotional toll: stress, fear and uncertainty
Sarah describes the entire period as “a really strange, stressful time.” She felt like she was being pulled through the process, holding onto the hand guiding her, but not always fully understanding what was coming next.
There was the fear of whether she’d done everything correctly; the fear of how long the process would take; and in Sarah’s case, a personal worry about what might happen if she couldn’t repay the amount being asked of her – a concern that can arise in situations involving an overdrawn director’s loan account or where particular issues need to be negotiated.
“You’re dragged blindly ahead,” she says. “And because my business was small, I just couldn’t understand why it was all taking so long.”
But liquidation timescales can vary for a variety of reasons, sometimes due to statutory steps, sometimes because of specific circumstances in a case. Lisa explains that investigations into accounts, director conduct, missing information, creditor claims and statutory notice periods all take time. Even the final dissolution at Companies House can add months. “It isn’t cheap and it isn’t quick,” Lisa says. “But I do understand why directors get frustrated, particularly when they’re emotionally exhausted.”
The cost shock and the director’s loan account confusion
One of the most difficult parts of Sarah’s experience was the financial shock. She had been told initially that the process would cost the company around £5,000, but once the liquidation progressed, she discovered she owed the company money, not something she had been aware of. “I had to dip into my pension,” she explains. “I thought I had no choice. It didn’t occur to me that I could negotiate or question it. You don’t know what you don’t know.”
Lisa explains that this situation often comes down to an overdrawn director’s loan account, something many directors don’t realise applies to them. Payments taken as drawings rather than salary or dividends can later be treated as “money owed back to the company” and in liquidation, the liquidator must attempt to recover those funds.
Lisa notes that when she advises directors herself, she always explains the issue upfront: “Directors deserve transparency. And negotiation is often possible, but many don’t realise that.”
Reaching the end and discovering relief
Despite the stress, the waiting and the unexpected complexity, Sarah says the moment the liquidation was finalised brought an immense sense of release.
“It was freeing. Liberating. Once it was all done, I could finally move on,” she says. “I’d done everything properly. It was finished and signed off. I didn’t have to think about it anymore.”
The closure allowed her to step forward into a new chapter. She now works as a coach and mentor, teaches on Insight Timer, creates courses and is researching a new book. Letting go of the business gave her space to rebuild on her own terms.
“I’ve been through all of it, from founding a business, to running it, to liquidating it,” she says. “That wisdom grounds you. It helps me support others more authentically.”
Advice for directors: seek help early and don’t go through it alone
Sarah and Lisa end their conversation with the same message: act early, and don’t bury your head in the sand. “It’s going to be a rough ride,” Sarah says, “but you will get through it. It might feel like a rollercoaster, then rapids, but eventually you reach calmer seas.”
Lisa agrees: “My first conversations are always free and confidential. I’ll give honest advice, even if liquidation isn’t the right option. But ignoring things will never make them better.”
Worried about your business? We can help.
Start with our free, confidential 60-second Business Health Check – a quick way to identify early warning signs and understand your next steps.
👉 https://www.parkerandrews.co.uk/health-check/
Or call 0800 612 7593 to speak directly with one of our licensed insolvency practitioners for tailored advice.
