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Unfit Director Conduct Allegations by Insolvency Service Abandoned

Our solicitors ensure the client avoided possible Director Disqualification as a result. Pressure relieved.

Our Director client found herself on the wrong end of Unfit Director Conduct allegations, in the context of a Director Disqualification Investigation (DDI), where the Insolvency Service (‘IS’) alleged:

  • That she allowed the company ‘to trade to the detriment of HM Revenue & Customs (‘HMRC’); and
  • There was a failure to maintain adequate books and records or alternatively she failed to deliver up to the company’s Liquidator adequate records to explain intercompany transactions and payments.

At liquidation, HMRC was the largest creditor, being owed circa £155,000. 

The company demonstrably failed due to Covid-19 related issues.  With her other separate businesses trading well, the Director was keen to avoid a Disqualification Order.  With that in mind, she sought the advice of NDP’s specialist Solicitors.

Our in-depth analysis demonstrated that the Insolvency Service’s allegations were not valid

Our Senior Solicitor’s analysis of the demise of the company revealed an explicable and compelling picture that was a far cry from the bleak picture created by the IS. We were able to demonstrate that the IS wrongly and without foundation alleged that payments to connected companies were not legitimate and had been made in preference to settling liabilities due to HMRC (hence the alleged detriment to HMRC).

We were further able to demonstrate to the IS, looking at all the circumstances of the case, that the transactions in question were in fact adequately explained in the books and records that had been delivered up to the Liquidator.  

Following a detailed letter of representations from NDP to the IS, we were able to demonstrate that our client was not an unfit Director and that she had not wilfully disregarded her fiduciary and statutory duties owed to the company. She and her company were victims of the Covid-19 pandemic.  A genuine business failure.

In light of the above after exchanges of correspondence with NDP, the IS abandoned its DDI against the Director.

The Director was delighted, thanking us for our unwavering support and expertise in securing such a fantastic result.

This case reminds us that a Disqualification Order is not always a certainty, when you have experienced Solicitors representing you.

Legal Costs – outweigh the long term costs (reputationally and financially) of Direcrtor Disqualification

Yes, there is inevitably an irrecoverable spend for the Director in such cases, where the IS abandons a Director Disqualification Investigation (DDI) before the commencement of Court proceedings.  However, the benefit of ridding the Director of the DDI, inevitably outweighs the irrecoverable legal spend and the real prospect of being disqualified from being a Director or acting in the promotion, formation of management of a limited company, for the duration of the ban.

Talk to our director disqualification specialists if threatened with a DDI. We have a strong record in defending directors in this area. Click here to read some of our director disqualification testimonials.