Home » Case Studies » Director Disqualification Case Studies » Director avoids significant period of Director Disqualification and a Director Disqualification Compensation Order (‘DDCO’) for alleged Bounce Back Loan (‘BBL’) fraud and inadequate company books and records

Director avoids significant period of Director Disqualification and a Director Disqualification Compensation Order (‘DDCO’) for alleged Bounce Back Loan (‘BBL’) fraud and inadequate company books and records

“NDP’s advice was specific and targeted. I followed that advice which resulted in the case being concluded with no further action.” December 2023

This testimonial and case study details how we recently helped to secure the abandonment of a Director Disqualification Investigation (‘DDI’), in circumstances where the Secretary of State (‘SOS’) was seeking a higher-bracket (11 years) Disqualification Order to be made against a Director of a company that had gone into insolvent liquidation, with an unpaid Bounce Back Loan.

The Insolvency Service (‘IS’) are tasked with conducting such investigations on behalf of the SOS. However, in this case the SOS instructed a national panel firm of Solicitors to investigate whether it was expedient in the public interest (i.e. the legal test) to seek to obtain a Director Disqualification Order on the facts of this case.

The Courts have the power to disqualify a person from acting in the management, formation and promotion of a company for a period of between 2 to 15 years in circumstances where it would be in the public interest to do so.

The details of this Director Disqualification case

Two key areas of investigation in this case were identified by the IS:

  1. Alleged misuse of BBL funds; and
  2. Alleged failure to keep adequate company books and records (also a Criminal Law offence if proved).

The Director Questionnaire

Initially, the Director client was asked to complete a Questionnaire to assist the SOS’s Solicitors in their investigation. Completion of the Questionnaire by the Director is a vitally important task.  Wrong, incorrect or inappropriate answers given will often come back to haunt the Director at a later date.

Following the completion of the Questionnaire with NDP’s assistance, the IS abandoned their books and records enquiries, which came as a huge relief to the client given the possible criminal consequences that may have flowed if such an allegation was made out.

The enquiries of the IS into the potential misuse of BBL funds continued however.

Our response to the BBL fraud allegation

NDP were instructed to prepare detailed, written representations on behalf of the client detailing all of the relevant circumstances of the case, intended to persuade the SOS’s Solicitors to abandon the DDI.

Carefully crafted representations were prepared on behalf of the client. The SOS remained unwilling to discontinue the Director Disqualification Investigation (‘DDI’) and threatened to issue Director Disqualification proceedings.  Further, additional written representations were then made by NDP to the SOS’s Solicitors.  Third party information was obtained on behalf of the Director client and forwarded to the IS’s Solicitors as part of that second phase work.

Through a subsequent detailed set of negotiation, NDP managed to persuade the SOS to discontinue the DDI against our client.

The SOS’s Solicitors were receptive to NDP’s further approach and the abandonment of the DDI was secured to the delight and relief of NDP’s client.

We are very experienced in all aspects of Director Disqualification work, to include BBL related DDIs

When considering whether to pursue a Disqualification Order against a Director, the SOS must consider all of the facts and circumstances of each case.  The SOS as strangers to the company and its dealings inevitably does not know of all such matters.  The well-advised Director will fill in those information gaps, in a coherent and persuasive way to meet the allegations of Unfit Conduct that are made.

In every case, it is crucial for a Director being investigated by the SOS to personalise matters and protect their position. This is where we come in, as demonstrated in this case.

Take up the IS on its offer to the Director for him/her to provide evidence and representations to the IS

In our experience, the SOS is far from being unreceptive to receiving detailed and evidenced representations.  Diligent and persuasive  management of a Director’s defence position goes a long way in securing the abandonment of an Investigation.

Meeting with the IS

This is another option open to the Director.  We regularly conduct such meetings for Directors with the IS.

Our client was delighted that the Director Disqualification case was dropped

“I thought I would never be able to act as a director again, when I received a letter from solicitors acting on behalf of the Insolvency Service who were threatening to disqualify me from acting as a director for misusing a Bounce back loan.

I contacted Sukhbir Mall* and Tom Clinton at NDP. They were a pleasure to work with, very professional, informative and knew exactly what needed to be done.

They explained matters to me in a language that I could understand and mapped out a realistic and achievable way forward. When we hit the brick wall reality that the Secretary of State, through its national firm of lawyers, would not back-off despite a very detailed and specific letter of representations, Sukhbir changed tack. The advice was specific and targeted. I followed that advice which resulted in the case being concluded with no further action.

It was great to know I could trust NDP, who got the result I needed and closed this regretful chapter in my life. I would recommend them highly.

*This article was written by Sukhbir Mall, a Solicitor (since 2001) and Director of NDP. He is highly experienced in defending Directors who are undergoing a DDI. His experience earlier in his career, of working for the IS as an Investigator within their Director Disqualification unit means he has a deep understanding of how the IS works and what it is looking for in cases such as these. This has helped him deliver many excellent results for Directors.