After 40 years advising directors in distress, one thing I’ve learned is this: if you didn’t write it down, it’s as if it never happened.
When a company is struggling, or even just navigating uncertainty, directors are always working incredibly hard behind the scenes, far harder than any employee could ever imagine. They weigh up difficult choices, take professional advice, and try to balance the interests of stakeholders. But often if they don’t document that decision-making process, and that can come back to bite them badly.
The Courts Want Evidence, Not Excuses
When a company enters insolvency, liquidators, creditors, and courts can all take a close look at how and why directors made certain decisions. What did they know at the time? What steps did they take to protect creditors? Why did they carry on trading? Did they act honestly and reasonably?
These aren’t just academic questions, they can determine whether directors are held personally liable for losses or disqualified from acting in future.
And here’s the catch: you’ll be judged on what you can prove, not on what you remember. You see, recollections fade, emails get deleted. And generic board minutes drafted after the event never stand up to close scrutiny.
Contemporaneous evidence, that is to say documents made at the time, can be the difference between a smooth winding-up and a drawn-out legal fight.
What Counts as Contemporaneous Evidence?
Good evidence doesn’t have to be formal. Courts and regulators will consider:
Internal board minutes or decision logs (even if informal).
Emails or notes showing when advice was sought, what that advice was, what decisions were made and why as a consequence.
Written risk assessments and financial projections.
Records of creditor discussions or payment plans.
Justifications for decisions that carried risk (e.g. paying certain suppliers over others, continuing to trade when cash was tight).
Even handwritten notes, email chains, or WhatsApp conversations can help, provided they clearly show your thinking at the time.
Why Timing Is Everything
The key word is ‘contemporaneous’. Notes made at the time, or very shortly after, carry much more weight than statements written months later when things have gone wrong. That’s because they’re more likely to reflect your real thought process rather than being influenced by hindsight.
In one recent case, directors who were able to show contemporaneous notes of their discussions and decisions (including emails about creditor interests, cashflow concerns, and legal advice) were able to fend off accusations of wrongful trading. It wasn’t that they got everything right, it was that they could demonstrate they were acting responsibly.
A Habit That Could Save Your Skin
We always advise directors to adopt a few simple practices:
Keep a director’s diary – whether it’s a notebook, Word doc, or shared file (I recommend reMarkable, it’s a superb piece of kit).
Log all key decisions, especially where finances, creditors, or trading risk are concerned.
Record when and why professional advice was taken – and what you did in response.
File correspondence with creditors, lenders, and HMRC in a dedicated, safe, place.
This is not about bureaucracy for bureaucracy’s sake. It’s about protecting yourself. If a liquidator or regulator ever knocks, you’ll be glad you took five minutes to record your rationale.
Final Word: Notes Show That You Cared
Directors are human. None of us get everything right. But when you can show you made decisions thoughtfully, took advice, and kept creditors in mind, you stand on much firmer ground.
If your company is under pressure, or if you just want a no commitment chat about what good decision-making looks like, I’m here to help. And if there’s one lesson I’d pass on, it’s this:
Write it down. Do it at the time. It could make all the difference.
To go to a suggested file note template, click here.