NDP were contacted by a company Director who had received a Section 16 letter from the Insolvency Service in which they alleged that the Director’s conduct – which made him unfit to be a Director of a company – was that he had obtained a second BBL for and to which the company was not entitled.
The Insolvency Service initially maintained that director disqualification was in the public interest and continued to press for that outcome for much of the case. Through detailed written representations, a meeting with the Insolvency Service and a material change in circumstances, NDP, led by Sukhbir Mall and Mandeep Nagra succeeded in securing the withdrawal of the intended Director Disqualification proceedings.
Background to this Director Disqualification case
Our Director Disqualification Solicitors, Mandeep and Sukhbir, met with the Director to take his detailed instructions and to prepare a detailed letter of representation on his behalf explaining the full and true circumstances in which the second BBL was applied for. The Director’s position was that at the time he had applied for the second BBL he was not aware that his company was only entitled to apply for one BBL at any one time. There was no intention to knowingly mislead the second bank, and all monies obtained from both BBLs had been used for the economic benefit of the company. The Director informed the Insolvency Service prior to instructing NDP, that he was prepared to repay both BBLs.
Initial representations by our Director Disqualification specialists
After submitting to the Insolvency Service detailed written representation on behalf of the Director, the Insolvency Service replied maintaining that it remained in the public interest to disqualify him. Obviously, this was disappointing for the Director, who felt that he made a genuine mistake in applying for the second BBL. He wanted to make things right. He wanted to have a meeting in person with the Insolvency Service to argue his case.
Meeting with the Insolvency Service
A meeting was then arranged with the Insolvency Service, when representations were made on behalf of the Director, as to why it was not in the public interest to pursue a Director’s Disqualification against him, reminding the Insolvency Service that he was still prepared to repay both the BBLs.
It was also highlighted at the meeting, that the investigation against the Director, had a significant impact on his well-being and mental health. Following the meeting in person with the Insolvency Service, they stated they were still satisfied that a case for disqualification was made out and that it remained expedient in the public interest to seek a Disqualification Order against the Director.
What next?
Throughout the process, the Director consistently maintained his willingness to co‑operate fully with the investigation. NDP advised that, in order to strengthen his position and to demonstrate continued good faith, he should take further steps to address the concerns raised and provide additional evidence of his constructive engagement.
Following this advice, we wrote to the Insolvency Service setting out that there had been a material change in circumstances in the Director’s case. Shortly thereafter, the Director took the recommended steps to reinforce his co‑operation and compliance.
NDP subsequently wrote to the Insolvency Service, inviting it to discontinue its investigation and the intended proceedings against the Director in light of the material change in circumstances and the Director’s proactive conduct.
Outcome – Director Disqualification Proceedings dropped
The Insolvency Service replied stating that as a result of that further information provided and the Director’s mental health issues, the Secretary of State did not propose to take any further action in respect of the Director Disqualification proceedings against him.
Financial compensation
Because the threat of Director Disqualification was removed, the Insolvency Service also confirmed that no action would be taken with regard to the pursuit of compensation.
Persistence and compelling arguments persuaded the Insolvency Service to take no further action
This case shows how sustained, structured representations and a genuine change in circumstances can lead to Director Disqualification proceedings being brought to an end, even in a Bounce Back Loan case such as this where the IS were not to be persuaded for much of the progress of the case.
It also appears to show that the Insolvency Service, will consider the repayment of the BBL, and a person’s overall conduct and (mental) health, in determining whether to progress with their investigation or not.
If you are a director facing an investigation by the Insolvency Service, contact our experienced Director Disqualification solicitors or call us on 0121 200 7040 for a free of charge, no obligation initial discussion.
