Director Faced With Director Disqualification Proceedings Defeats Might of Secretary of State.
NDP was recently instructed by a director of a company specialising in public houses and the entertainment services, who found himself in the serious position of being served with director disqualification proceedings, with the disqualification period sought being 8 years. This case study shows how our director disqualification solicitors were able to persuade the Secretary of State for Business, Innovation and Skills to drop the proceedings.
What Were The Allegations Leading up to the Director Disqualification Proceedings?
The allegation made against the director was that he had failed to maintain and preserve adequate books and accounting records or, alternatively, that he had failed to deliver up those records to HMRC.
The Secretary of State alleged that as a result, it was unable to establish the legitimacy of payments being made out of company funds to third parties of c.£1.8 million, the majority of those third parties being connected companies with associations to the former directors.
In addition, the Secretary of State also alleged that in the absence of the books and records it was impossible to establish the true sums due to HMRC.
As a result of these allegations, The Secretary of State was seeking a director disqualification order against the director for a period of 8 years. The allegations of unfit conduct were thus very serious.
The Director Instructed our Director Disqualification Specialists to Help
The director, who had no previous experience of running a limited company, and in fact had never heard of director disqualification proceedings, had resigned himself to being disqualified as a director. He instructed NDP in large part to seek a reduction of the disqualification period.
The team at NDP were not so quick to give up hope and having listened carefully to his story, we were confident that a favourable outcome was achievable.
We spent time carefully considering the evidence, carrying out detailed investigations and making third party enquiries to corroborate and evidence what the director told us.
Our experience in defending director disqualification proceedings enabled us to use the results of our investigations to prepare robust defence evidence to the claim, responding to each of the allegations made by the Secretary of State.
We were able to demonstrate that the director had in fact been excluded from the running of the company, and deprived of access to the company books and records. We were also able to demonstrate that the company (unbeknown to our client) was in fact being controlled by a shadow director, who had himself been disqualified from acting as a director of any UK company for 12 years.
The Outcome? The Director Disqualification Proceedings Were Dropped
Despite the serious nature of the allegations made against the director, NDP were able to demonstrate weaknesses in the Secretary of State’s evidence. As a result the Secretary of State conceded that its prospects of successfully securing a director disqualification order against the director were seriously diminished. The Secretary of State subsequently confirmed that it would no longer be seeking a disqualification order against the director and proceedings were discontinued.
NDP was able to achieve this result in just over 5 months to the delight (and relief) of the director. NDP are currently negotiating with the Secretary of State’s solicitors with a view to the Secretary of State reimbursing the directors costs incurred in defending the proceedings.
If you are facing director disqualification proceedings, or have been contacted by the Insolvency Service with a view or commencing disqualification proceedings, please telephone us on 0121 200 7040 or contact us immediately. The sooner you contact us, the more we can do to help.