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Lengthy Period Of Director Disqualification

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9 Year Director Disqualification for Failing to Account for Over £1.3 Million in Cash Withdrawals. 

In a recent press release, the Insolvency Service reported that Mr John Henry Hierons (‘Mr Hierons’) had received a director disqualification period of 9 years as a result of his conduct whilst a director of Lenco Commercial Services Ltd (‘the Company’), for failing to provide proper accounting records.

This article demonstrates how seriously the Courts view a failure by Company Directors to fulfil their statutory duty under the Companies Act to keep sufficient company records to satisfactorily explain payments and records.

The Details of This Director Disqualification Case

The Company traded from November 2010 to September 2012 and at the date of liquidation in January 2013, the recorded deficiency was a relatively modest £26,000.  However, following an extensive investigation by the Insolvency Service it was revealed that between February 2011 and September 2012 over £1,300,000 in cash had been withdrawn from the Company bank account, without any supporting documentation.

As a result of those investigations the Secretary of State for Business, Innovation and Skills brought director disqualification proceedings against Mr Heirons. Mr Heirons failed to appear at Court and the Court considered the evidence in his absence and imposed a nine year director disqualification order against him.

What the Insolvency Service Said

A Chief Investigator at the Insolvency Service, Mr Mark Bruce, stated that:

The disqualification sends a clear and robust message to other company directors that if you do not take your responsibilities seriously, like in this case, we will act to disqualify you.

John Henry Heirons withdrew a substantial amount of cash yet failed to provide bona fide documentary evidence whilst creditors went unpaid. Members of the public will no doubt be alarmed at his behaviour and that is why we have removed him from the business environment.”

As Specialists in Director Disqualification, We Can Help

This case certainly demonstrates the seriousness of the statutory duties that directors must comply with in keeping sufficient company records and to be able to satisfactorily explain and justify transactions and payments entered into in the course of trading.

9 years is a lengthy director disqualification period, and it means that Mr. Hierons cannot be a director of a company, indirectly as well as directly. Additionally, he cannot be involved in the management of a company for the entire period of his disqualification without permission from Court.

It is noteworthy that Mr Hierons failed to engage in the disqualification process, which might help explain the severity of the disqualification period. However even when a director is faced with such serious claims as these, there may be legitimate explanations for the conduct complained of and a director disqualification term is not necessarily the only outcome. Even if it is, it might be possible to reduce the length of the disqualification period. This is where our specialist team of director disqualification and insolvency solicitors may be able to help.

If you find yourself in a similar position and are facing director disqualification, the earlier you get in touch with us the better. Please contact us or call us today on 0121 200 7040 for a FREE, no obligation initial chat.

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