Director Disqualification for Causing Insolvency by Not Carrying Our Due Diligence
Ian Wardle was the CEO and de facto director of the Lifeline Project, a charity that provided drug and alcohol rehabilitation services to over 80,000 people across England and Scotland, including a number of prisoners. In June 2018 the charity was placed in voluntary liquidation and the administrator’s report prompted an investigation by the Insolvency Service, which resulted in a 7-year director disqualification for Mr. Wardle for not carrying out his duties as a director. This case study looks at what went wrong and why Mr Wardle was disqualified.
The Charity Was Unable to Pay its Debts
The charity employed 1,300 people across 90 sites throughout the country, but called in insolvency practitioners in March 2017 after it was unable to pay its debts following a financial shortfall of £1.4 million. Just over a year later, in June 2018, the charity was placed into voluntary liquidation by the Administrators.
The administrators’ statutory report to the Insolvency Service triggered an investigation and enquiries revealed that, between August 2015 and January 2016, Ian Wardle had entered the charity into three Payments by Results (PbR) contracts, with various local authorities. A PbR contract is common in the health services industry, where payment is only made for services if certain pre-agreed targets are met.
Ian Wardle Had not Undertaken the Necessary Due Diligence
Ian Wardle, however, signed these contracts without his undertaking the necessary due diligence; He failed to realise that the targets set were unachievable. This resulted in the non-payment of more than £1.4 million – the shortfall that caused the charity to close.
Director Disqualification was the Result
On 2 May 2019 the Secretary of State accepted a director disqualification undertaking from Ian Wardle of Bolton for a period of 7 years for causing Lifeline Project to sink by entering into contracts that set “unachievable targets”.
Robert Clarke, Chief Investigator for the Insolvency Service, said:
“This case highlights the damage an irresponsible director can do even to longstanding charities and businesses that have served their communities well for decades.”
“The lengthy disqualification is a warning to other directors who handle charitable funds that the Insolvency Service stands ready to take action to prevent the infliction of further damage to the charity sector.”
Our Director Disqualification Solicitors Comment
The length of the Director Disqualifications given out in this case shows the seriousness with which the Insolvency Service views such conduct. Although it may at first glance seem harsh on the facts, the Insolvency Service will target and pursue directors that endanger the businesses that they direct.
The team of director disqualification solicitors at NDP are experienced in dealing with such claims made by the Insolvency Service and have a strong track record in successfully defending directors who are threatened with disqualification. Click here to see some of our testimonials.
For help and advice on defending yourself if threatened with disqualification, talk to our Director Disqualification Specialists by calling us on 0121 200 7040, or contacting us. The earlier you get in touch, the more we can do to help.