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If a company enters an insolvency process, the liquidator or administrator (known as ‘the officeholder’) will submit a report to the Insolvency Service regarding the conduct of the director, in particular, any culpability for the demise of the company.
The Insolvency Service may investigate the conduct of a director and, if appropriate, require them to account for their actions. If the Insolvency Service considers that the director is guilty of wrongdoing, it may initiate proceedings to disqualify the director from acting as such for a period of two to 15 years, depending upon the seriousness of the wrongdoing.
JMW’s team of specialist lawyers has experience of these types of actions, and can assist you from the outset of any investigation by putting forward representations on your behalf, negotiating voluntary disqualification with reduced periods, applying to the court for permission to act or fully defending proceedings.
How JMW Can Help
Our solicitors can advise on all aspects of proceedings from challenging the making of a disqualification order and negotiating the length of the disqualification to applying for a disqualified director to be involved in the management of a company.
Our expertise includes:
- Dealing with the Insolvency Service
- Defending court proceedings
- Negotiating settlement
- Applying for permission for leave to act as a company director
We will go through everything that led to your circumstances to help us fully understand your situation, in order to help us build a successful case for you. We will always aim to avoid disqualification for our clients, but where this is not possible we will aim to have the disqualification period significantly reduced, allowing you to get back on track sooner.
The Insolvency Service Investigation Process
A director can elect to enter into a disqualification undertaking at any time prior to or during proceedings, voluntarily disqualifying themselves as a director and, thereby, avoiding or ending court proceedings and potentially saving the costs of having to defend the proceedings.
Evidence can be provided to the Insolvency Service and/or the court by a director, and, if it is found that the proceedings are no longer in the interest of the public, they may be discontinued.
If proceedings are issued and a director successfully defends the disqualification, the Insolvency Service will typically pay the director’s costs. Conversely, if a director is unsuccessful, they will be ordered to pay the costs incurred by the Insolvency Service.
The Insolvency Service may also seek a compensation order, which requires the disqualified director to personally pay a sum of money as compensation for the losses caused by the director’s conduct.
Directors found in contravention of a disqualification undertaking or order will have committed a criminal offence and can be fined and/or imprisoned for up to two years. This in turn will often lead to further disqualification proceedings. If a director breaches a disqualification undertaking or order, they may be personally liable for any debts incurred by the company during the contravening period.
A disqualified director can apply to the court for permission to act as a director despite being subject to a disqualification undertaking or order.