A limited company becomes insolvent when it can no longer pay its bills when due, or its liabilities; including contingent liabilities such as redundancy payments, outweigh the company's assets. This is a critical point in the lifespan of a company as it denotes when the directors responsibilities change from protecting the interests of the shareholders to protecting those of the creditors. It also means that the directors need to be extremely careful when considering whether to continue to trade, or not. Any director who knows that the company is insolvent and makes the decision to continue to trade, and in doing so increases the debts of the company can be made liable for the company debts.