If you have ever won a small claims case against a limited company only to find they have “no assets” while the director starts a new business the next day, you know how frustrating the system can be.
However, as of March 2026, the tide may be turning. The Insolvency Service has just proposed a new “Director Restrictions” regime designed to catch those who treat unpaid debts as a standard business practice.
What is changing in 2026?
The government is currently consulting on a plan to crack down on “lower-level” misconduct. While disqualification used to be limited to serious impropriety or fraud, the new proposals suggest:
- Three-year restrictions for directors who fail to pay Crown debts (like tax) or who have multiple corporate failures in a short period.
- Signatory bans: Restricted directors would be banned from being the sole signatory on a company bank account.
- Transparency: These restrictions would be a matter of public record, making it much harder for phoenix companies to take advantage of suppliers or customers.
Why this matters for your Small Claim
For a long time, the threat of a small claim was often ignored by savvy bad debtors because they felt the consequences were remote. These 2026 reforms send a clear message: unpaid debts and poor corporate conduct may now have personal consequences for directors.
Even before these new rules become law, the shift in policy is already influencing how courts look at debt recovery.
Three tips for recovering money from a company in 2026:
- Check the Director, not just the Company: Before you issue your claim at court, look at the director’s history on Companies House. If they have a trail of dissolved companies, you need to act fast and consider the viability or pursuing the debtor.
- Don’t wait for the reforms: While the new restrictions are coming, the current Small Claims Track is still your most powerful tool. If you are owed money, getting your claim in the system now is better than waiting for future laws and policies to help you.
How Small Claims Court Genie can help
At Small Claims Court Genie, we specialise in helping you navigate the system as it stands today. Whether you’re a freelancer chasing an invoice or a small business dealing with a difficult client, we give you the know-how to get paid.
