A Director Disqualified for Putting Their Own Personal Gain Ahead of the Company’s Creditors.
This article looks at a director disqualification case where the director was disqualified for his part in transactions that were to the detriment of the company’s creditors.
According to a UK Insolvency Service press release a Mr. Paul Edward Ward (‘Mr Ward’) from Leicester, was given a director disqualification undertaking for a period of seven years. Bearing in mind the misconduct summarised by the UK Insolvency Service, below, in our view Mr Ward was fortunate only to be disqualified for seven years.
Why was Mr. Ward Disqualified as a Director?
In summary, at a time when the company of which he was a director – NSA Electrical & Solar Limited (the ‘Company’) – was insolvent, Mr Ward transferred at least £241,500 of company monies into his own personal bank account. In addition, a further £573,640 was transferred into an account other than the company bank account.
It was also stated that the Company had liabilities upon administration of over £1.2million. It is quite likely that the liquidator is taking steps to collect in the Company’s assets from Mr Ward.
Mr. Ward Might Also Face a Misfeasance Claim
In addition to his disqualification as a director, Mr. Ward may also be facing a claim from the liquidator for Misfeasance under Section 212 of the Insolvency Act 1986 (amongst other possible claims) for breaching his duties as a director. That could result in a Court ordering that Mr. Ward makes a financial contribution towards the assets of the Company for the benefit of creditors.
One other possible claim could arise from section 423 of the Act, Transactions Defrauding Creditors, where those transactions are entered into at an undervalue, such as by gift or a lesser monetary value than would be commercially expected. This is where the Court can be asked to restore the position if, amongst other things:
“(3) In the case of a person entering into such a transaction, an order shall only be made if the court is satisfied that it was entered into by him for the purpose—
(a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or
(b) of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make.”
Such a claim could not only follow from the liquidator, but also from ‘victims’ of the transaction (as per subsection (5)) to include the creditors of the Company.
We can help with Director Disqualification and Misfeasance Claims
If you are a company director and are facing an investigation from the UK Insolvency Service, a UK based liquidator/administrator or a creditor is threatening a misfeasance claim or other type of claim against you, we can help, because we are specialist director disqualification solicitors.
Simply contact us or call us on 0121 200 7040 for a free initial chat. Or why not email us a scan of the threatening letter that is almost always received at the beginning of a director disqualification or misfeasance process, and we will call you back to discuss on a no-obligation/no cost basis. If you are not in the UK when the investigation or claim process has started, we will work around you wherever in the world you are based.
No hole is too deep for us to be able to help you, but the sooner you talk to us the more our director disqualification solicitors will be able to help.