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Director Disqualification

If you are a director and you are being threatened with Director Disqualification proceedings by the Secretary of State/Insolvency Service, talk to us.

A disqualification period, which can be for a maximum of 15 years, will have a serious impact on the life of a director – both personally and in business. We have an excellent track record in helping to reduce or eliminate the prospect of disqualification for directors.

Contact us now if you are threatened with Director Disqualification.

The Director Disqualification team at NDP is headed by Neil Davies, and is made up of experienced Solicitors who have worked for the Insolvency Service and who have acted for and against the Insolvency Service. The Insolvency Service is the main body that conducts investigations into the conduct of directors at their companies that could lead to disqualification.

The Insolvency Service has many powers, and when it threatens a director with disqualification, the threat must be taken seriously. We know what they want, what the best solutions for our clients are to avoid disqualification and how to achieve them.

You might say that we are Gamekeepers turned Poachers. The key issue for a director facing a disqualification investigation is to act quickly to maximise the available options.

Have a look at some of our testimonials where we have helped directors of companies avoid disqualification, or reduced the period of disqualification. We like to say that no hole is too deep for us to help, and we aim to be the directors’ friend, helping and supporting our director clients all along the way.

If you are threatened with Director Disqualification, the sooner we talk, the more we can do to help. Call us 0121 200 7040, for a FREE initial discussion, or contact us.

Insolvency Solicitors
The NDP Team

The quicker you take action when facing an Insolvency Service Director Disqualification Investigation, the better

The Insolvency Service can and does scrutinise the circumstances of company liquidations and administrations following insolvency. If it has reason to believe that the directors have not fulfilled their duties then the likelihood is that they will instigate a Director Disqualification Investigation (DDI) into the conduct of the directors.

Such investigations can be extremely stressful for the directors involved. Our experience is that each case rests on its particular facts and that the Insolvency Service is often only seeing one side of the story. It is by no means certain that a DDI will end up with a period of disqualification. Our approach is to establish the facts, as forensically as possible, and, if there is a case, present it to the IS, to persuade them to drop the investigation. Our knowledge of this complex area of law, plus our determined and persistent approach, has seen us successfully defend many directors, as this recent news story from 2023 shows.

It is true to say that the Insolvency Service is highly active now, especially investigating Bounce Back Loan fraud, as well as their old favourites of trading to the detriment of the Crown and allegations of failing to maintain and preserve accurate books and financial records. For this reason, directors must careful and approach every liquidation process with their eyes open. We can help.

If you are threatened with Director Disqualification, the sooner we talk, the more we can do to help. Call us 0121 200 7040, for a FREE initial discussion, or contact us.

10 Reasons to use us if you are threatened with Director Disqualification

If you are a director or a shareholder and you are facing Director Disqualification or a Misfeasance Claim, the quicker you take professional advice the more likely it is that you will get a positive outcome.

We have a strong track record in successfully defending our clients. Click here to see 10 reasons why Directors and Shareholders should use Neil Davies & Partners to defend them against Director Disqualification and Misfeasance actions.

5 Helpful Facts For Directors Facing Disqualification for Crown Debt

Director Disqualification and Misfeasance Claims Against Directors are Increasing. Director Disqualification is on the increase. We know what the Insolvency Service wants and we know what the best solutions for our clients are and how to achieve them when facing director disqualification.

We have a strong track record in successfully defending our clients. Click here to see 10 reasons why Directors and Shareholders should use Neil Davies & Partners to defend them against Director Disqualification and Misfeasance actions.

The key issue for a director facing a director disqualification problem is to act early, to maximise options.

We advise on the following areas (click on a section below to expand it):

The law has changed on Director Disqualification. The changes began on 01 October 2015, when new provisions relating to the Company Directors Disqualification Act 1986 (‘CDDA’) were introduced as part of the Small Business, Enterprise and Employment Act 2015.

Essentially, these new provisions tightened up the rules on Director Disqualification in several areas, to prevent Directors who have shown themselves to be unfit, from continuing to act as Directors for a specified, future period, without permission of the Court.

One of the areas where the provisions have been tightened is in Compensation Orders, where the changes are likely to be bad news for Unfit Directors and quite possibly for Liquidators and Administrators.

The framework and necessary subordinate legislation needed to see compensation claims against directors pursued is being put in place and was expected to come into force on 01 October 2016. In our view, this change is likely to result in significant personal claims against disqualified Directors. Click here for more details.

Contact us or call us on 0121 200 7040 for help and advice if you are a director facing disqualiifcation.

The first contact from the Insolvency Service may be a pre-action letter from the Insolvency Service or its solicitors, threatening the director with commencement of Director Disqualification proceedings. How should you respond to such a letter?

  • Don’t ignore it.
  • That letter gives a time limited opportunity to the director to make representation (in writing or in a meeting) as to why disqualification is not necessary or in the public interest – use the opportunity.  NDP’s Solicitors are well used to maximising this opportunity to best advantage for the director facing the threat of disqualification..

This pre-issue period is, in most cases, a time when you can tell your story, as a directior, to the Insolvency Service, in a structured and coherent way, without any risk that you will be responsible for the opponent’s costs.

If you have any documents or witnesses that you believe assist your case, now may be the time to produce them and their evidence to your opponent.

NDP’s Solicitors are well used to dealing with all of the above issues. Contact us for help and advice.

Obtaining and interpreting the opponent’s written evidence, to be relied upon against the director, is the key to matters.  Sometimes, the opponent’s case can be dismantled and the opponent persuaded to abandon the case against the director, even before the client tells us his side of the story.

We know that the Insolvency Service may not even know your history as a director, or the reasons for the company failure at this point, or even of your experience with the Insolvency Practitioner who dealt with that failure. Contact us for help and advice.

NDP Team members have for over 25 years handled a myriad of fully contested director disqualification defence cases, from the more routine to the most serious and high profile cases.  We know each case is unique and we treat each case accordingly.

NDP has won many cases and persuaded the Secretary of State to abandon disqualification proceedings on many occasions. The client’s legal costs have often been recovered from the opponent on such occasions. Contact us for help and advice.

Our director disqualification solicitors regularly negotiate Undertakings and negotiate lower periods of disqualification for the director than that sought by the opponent.  That lower period is often crucially important to the client.

The maximum period which a director can be disqualified by way of an Undertaking is 15 years. The minimum period is 2 years. There are 3 distinct “brackets” of disqualification within this range.

  • 2-5 years – this is known as the “lower bracket”
  • 6-10 years – this is known as the “middle bracket”
  • 11-15 years – this is known as the “higher bracket”

Subject to the “gravity” of the offences giving rise to the allegations of unfitness, an individual director will face disqualification in one of those 3 categories.

If a director who is already subject to an Undertaking or formal court imposed Director Disqualification Order then agrees to a further voluntary Undertaking for a second “offence”, the Order shall run concurrently (Section 1A(3) of the Company Director Disqualification Act 1986).

The Secretary of State will nearly always accept a Disqualification Undertaking from a director if one is offered, providing that 2 main conditions are met:

  1. The Secretary of State must be satisfied that the director offering the Undertaking is or has been a director of a company which has at any time become insolvent and that the conduct of that person as director of that company makes him unfit to be concerned in the management of a company.
  2. Secondly the Secretary of State must believe that it is in the ‘public interest’ that he should accept a Disqualification Undertaking instead of applying or proceeding with an application for a formal Disqualification Order.

Contact us for help and advice in this area.

Sometimes a meeting (whether before or after the commencement of proceedings) with the Insolvency Service or its solicitors is important, not only to get the side of the story of the director across but also to give the director a chance to ask questions of the opponent.  The meeting may significantly reduce the chances of disqualification proceedings being commenced or of you receiving a disqualification.Contact us for help and advice.

NDP Team members regularly make successful applications to the Court to obtain permission for the director to continue as a director, even once disqualified.  We know what the Court and the opponent wants in order to ensure such applications stand the maximum prospect of success for the director.

NDP will only advise a director to apply for permission to continue as a director if upon consideration of your case it appears there is a reasonable chance of success.  The NDP Team can maximise your prospects of success by being involved in your case as early as possible, so that the precise wording of any Undertaking you give to the Insolvency Service and the length of disqualification period is as favourable as possible.

As a rule, the longer the period of disqualification, then the harder it will be to obtain permission and the more conditions that may be imposed on that permission for the director.

How to apply for permission to continue to act as a director

In terms of seeking permission from the Court to continue acting as a director (or being involved in the management of an existing business), the procedure is governed by the Practice Direction on Director Disqualification Proceedings which came in to effect in April 1999.

Step 1 This involves preparation of evidence in support of the application for the director. This will consist of drafting Affidavits (a type of written statement) in support of your application. These will need to exhibit all supporting documentary evidence backing up or referred to in your written statements.

Step 2 If you are already subject to a Director Disqualification Order, the application is commenced by filling out a Claim Form. If you are subject to ongoing proceedings, it is done by way of an Application Notice. Attached to the Application Notice or Claim Form will be:

  • a draft of the order you are seeking from the Court.
  • A list of the proposed conditions you agree to give as part of permission being granted by the Judge.
  • Sworn copies of all your finalised written evidence.

The length of the hearing will depend upon the volume of evidence to be heard and the attitude of the Secretary of State to the application of the director.

Step 3 Serve the Application Notice, draft Order and finalised evidence on the Secretary of State (or its solicitors if they have one) at least 3 clear working days before the date of the hearing (although longer is always better as there are always pre-hearing negotiations).

Step 4 Enter into negotiations with the Secretary of State (or its solicitors) as to the terms of the draft Order you are seeking and look to reduce any differences between the parties. This is a vitally important stage as otherwise you can be bound by very onerous conditions as part of being granted leave to remain a director despite disqualification.

Step 5 Attend the hearing and present the case to the Court. This will need to be done by a Barrister skilled in this area of the law. At NDP we have excellent relationships with Barristers experienced in this area of the law.

NDP’s Solicitors are well used to dealing with all of the above issues relating to director disqualification and permission to act. Contact us for help and advice.

Seismic Changes to Director Disqualification Law are here under the Company Directors Disqualification Act 1986.

  • The Small Business, Enterprise and Employment Act 2015 (‘SBEE’), which gained Royal Assent on 26th March 2015 introduced major changes to director disqualification law and practice, all of them weighted against the director in favour of the State. Click here for more details.
  • The number of director disqualifications and misfeasance claims against directors is increasing. Click here for more about what the Duties and Obligations of the Professional Adviser are in such cases. These duties, especially for accountants and auditors, are under increasing scrutiny.

We are regularly referred director disqualification cases by other Solicitors, Insolvency Practitioners, Accountants, local Law Societies and other professionals.  They know our expertise in this area of work and are content to entrust their clients to us.  NDP’s Directior Disqualifiucation Solicitors have an enviable reputation for excellence in this field of work.

Director Disqualification is stressful and has serious consequences

From the moment the notification of investigation from the Insolvency Service arrives, the whole process is stressful for the director. In addition, the cause of the investigation is usually due to companies – and therefore the director – facing a stressful insolvency or bankruptcy, perhaps through the non-payment of crown debt or other tax debts.

Being disqualified from acting as a director can have serious business and personal consequences for the director and his/her family. Acting positively as early as possible is vitally important, and allowing NDP to help may help the director avoid the prospect of disqualification, or result in a lower period of disqualification.

Contact us if you are a director under investigation

If the Insolvency Service is threatening you with a director disqualification investigation, call us now on 0121 200 7040 for a FREE initial discussion, or contact us online. The quicker you get in touch, the more we can do to help.

Director Disqualification is a detailed and complex area of law. For a list of questions that we are frequently asked in this area (FAQs), and their answers, click here.