The Real Life Consequences of Breaching a Director Disqualification Undertaking.

Director Disqualification, Imprisonment and Confiscation of Assets. 

The real life consequences of breaching a Director Disqualification Undertaking can be severe, including disqualification from acting as a director, imprisonment and the confiscation of assets, as the following case study case shows.

On 19 December 2014, at Bristol Crown Court, Mr John William Dixon (‘Mr Dixon’) admitted that he had breached his director disqualification undertaking, with the following consequences for him:

  • A suspended prison sentence. He was sentenced to a term 12 months concurrent imprisonment on each count, which was suspended for 2 years. He now has a criminal record.
  • Director Disqualification. He was disqualified by the Crown Court from being a director for 9 years and from being involved in the promotion, formation or management of a limited company business for an additional 7 years. In addition, he was ordered to undertake 200 hours unpaid work for the community.
  • Confiscation of Assets. He was made subject to confiscation proceedings, requiring him to pay £61,346 within 6 months or if in default of this requirement, serve a further 8 month term of imprisonment.
  • Payment of Compensation and Costs. He was ordered by the Court to pay compensation and costs of £139,000 within 6 months.

The total of the confiscation proceedings, compensation and costs was £200,346 and it was noted that Mr Dixon has interests in 4 properties that may be realised to pay this sum.

Why was Mr. Dixon’s punishment so severe?

Mr Dixon’s punishment following his guilty plea was in relation to offences of acting in the management of two companies whilst already subject to a director disqualification undertaking. His conviction followed a full criminal investigation and prosecution by the Department for Business, Innovation and Skills (BIS).

The Crown Court heard that Mr Dixon benefited personally from his criminal conduct and did not pay a number of creditors for works, which they carried out on his behalf.

The unpaid invoices ranged from £35 to £16,702.00. In total BIS sought compensation for 75 identifiable victims. Mr Dixon initially sought, without success, to persuade BIS that his actions were limited and that creditors (freelance translators) had not been unpaid as a result of the trading of his two companies.

BIS subsequently initiated confiscation proceedings, which resulted in the court making the following order on 19 January 2015:

 “Confiscation:  £61,346.00; payable within 6 months (8 months imprisonment in default).”

The investigation showed that:

  1. Mr Dixon between 30th day of November 2009 and the 1st day of April 2011, already being a disqualified director, acted as a director or directly or indirectly took part in or was concerned in the promotion, formation or management of a company, namely West Translations Limited company number 07091468, without the permission of the Court.
  2.  Mr Dixon between the 25th day of August 2009 and the 1st day of April 2011, being a disqualified person also acted as a director or directly or indirectly took part in or was concerned in the promotion, formation or management of a company, namely Aplingo Limited Guernsey registered company number 50820, again without the leave of the Court.

In both cases, Mr. Dixon was in breach of his director disqualification undertaking.

What The Department of Business Innovation and Skills said

Commenting on the result at Bristol Crown Court on 19th January 2015 BIS Investigation Officer, Tony James, said:

“Mr Dixon operated a translation service but did not pay his staff. This undermines the basic ethics of business. The Department of Business, Innovation & Skills will not tolerate such activity. By pursing Mr. Dixon through the court for these criminal offences the Department have secured compensation for several victims as well as a confiscation order for the benefit Mr Dixon obtained in the commission of his crime.

The enforcement of the compensation will be dealt with by HM Court Service.”

What this case demonstrates

This chilling example of the severe consequences of breaching a Director Disqualification Order is a sharp reminder of the need to not breach such Orders and of the need to seek Permission from the Court to be involved in the management of a company, or act as a director of a company if already disqualified from acting as a director, if appropriate.

NDP can help and advise on Director Disqualification matters

NDP are well placed to advise on and deal with defending director disqualification proceedings, when appropriate, negotiating settlement by undertakings and applying to Court to obtain permission to continue as a director even if already disqualified.

We cannot say what the outcome for Mr Dixon would have been had he sought Permission from the Court to continue as a director. However, if you or a client are facing director disqualification proceedings, then please contact us or call us on 0121 200 7040 for a free initial consultation. No hole is top deep for us to help, but the quicker you get in touch, the more we can do to help.


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