Director Disqualification for Husband and Wife for Abuse of Insolvent Company’s Assets
In this news story, our director disqualification solicitors report and comment on the case of Kevin Gerald Neal (‘Mr Neal’), and his wife, Cheryl Neal (‘Mrs Neal’), who have received director disqualification terms of 6 and 4 years respectively, due to their misconduct in Kevin Neal Associates Wealth Management LLP (‘the Company) at the time of its insolvency. The severity of these punishments shows how seriously the Insolvency Service views such delinquent behaviour by directors.
The Details of this Director Disqualification Case
The Company had been incorporated to take over the wealth management business of a previous company, Kevin Neal Associates Limited, which went into compulsory liquidation on 01 July 2013.
By a deed poll and declaration, signed by both Mr and Mrs Neal on 8 April 2011, the Company became liable, amongst other liabilities, for any award of the Financial Ombudsman Service against Kevin Neal Associates Limited.
By May 2014, at least six decisions by the Financial Ombudsman Service, totalling at least £573,274.00 had gone against Kevin Neal Associates Limited and the Company.
The Company’s previous insurer refused to settle the claims and the Financial Conduct Authority (FCA) had altered the Company permissions to ensure that it did not transfer away assets without its permission.
Despite this, between May and June 2014, the Company transferred £55,000.00 and two cars worth £22,120.00 to associated parties.
However, these transactions were to the unreasonable risk and ultimate detriment of other creditors who either submitted claims in the liquidation of Kevin Neal Associates Limited or were included within the Statement of Affairs.
An investigation by the Insolvency Service resulted in the Secretary of State for Business, Energy and Industrial Strategy accepting director disqualification undertakings from Kevin Gerald Neal and Cheryl Neal on 10 May 2018 for periods of 6 and 4 years respectively, effective from 31st May 2018.
The Insolvency Service’s Opinion
Mark Bruce, Chief Investigator for the Insolvency Service, said:
“This is a particularly blatant example of common misconduct seen by the Insolvency Service.
Mr and Mrs Neal plainly acted to improve their position, once the [business] was insolvent, while failing to honour either the prior decisions of the Financial Ombudsman or the protections put in by the FCA, specifically to stop such actions.Such conduct will invariably lead to disqualification.”
Comment by our Director Disqualification Solicitors
Had both Mr and Mrs Neal ensured that the Company complied with their statutory duties they may have been able to adequately deal with the concerns raised by the Insolvency Service as to the transactions. In these circumstances the possibility of reducing the period of director disqualification or even avoiding it would have existed, however slight.
This case is a stark reminder to company directors of their statutory duties under the Companies Act 2006 and the severe action the Insolvency Service will take for a failure to comply with them.
The length of the director disqualification given out in this case, shows the seriousness with which the Insolvency Service views this particular regulatory breach. The Insolvency Service continue to be quick to act to punish delinquent directors.
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