A Director Receives a Director Disqualification Period for Acting as a Director Whilst already Disqualified.
This article looks at a case in which 3 Solihull based directors received a combined total of 24 years of director disqualification. One of the directors was already disqualified from acting as a director.
The case shows the seriousness with which the Insolvency Service viewed their actions, with the investigation focusing on: acting as a director when not allowed to do so, allowing others to continue to run limited companies whilst disqualified and failing to comply with statutory obligations to pay the Crown.
Why were the directors disqualified?
The director disqualification periods were given for the usual Crown debt type allegations that the Insolvency Service often targets – trading to the detriment of the Crown and not paying taxes due. The combined Crown debt owed across the three companies investigated, was over £976,000.00, and so was quite a serious breach.
A Mr Delaney who was a director of DSPS Realisations Limited gave an undertaking not to act as a director of a company for 8 years. A Mr Shillaker, a director of DSPS Field Marketing Limited and Sure Connections Limited gave an undertaking for 6 years.
However, what makes these cases slightly different was that a third director, a Mr G D Onions, had already been disqualified as a director until 2018 for failing to ensure that his earlier company Deltaworld Limited paid taxes to the Crown. Mr Onions admitted acting as a director whilst disqualified from doing so.
Mr Onions is reported to have given a further undertaking not to act as a director of a limited company for a period of 10 years. Therefore the unfortunate Mr Onions is now disqualified from being a director until 2025.
The other two disqualified directors were found to have allowed Mr Onions to act as a director in the above mentioned companies for a period of over two years according to the Insolvency Service.
Robert Clarke, Group Leader of Insolvency Investigations North at the IS is stated to have said that:
“…if (other directors) act as a director when not allowed to do so, allow others to continue to run limited companies whilst disqualified or fail to comply with statutory obligations to pay the Crown… then you could lose the protection of limited liability.”
Mr Onions could face more than Director Disqualification only
Mr Onions is now exposed to potential criminal investigations by the Department for Business under section 13 of the Company Directors Disqualification Act 1986 (‘CDDA’) with imprisonment and/or a fine being the possible outcome for Mr Onions.
In addition Mr Onions could be made personally responsible (thus losing the protection of limited liability) for the company debts under section 15 of the CDDA. In addition the other two directors may also be found responsible under section 15 because they allowed Mr Onions to act as a director whilst disqualified:
(1) A person is personally responsible for all the relevant debts of a company if at any time …
(b) …as a person who is involved in the management of the company, he acts or is willing to act on instructions given without the leave of the court by a person whom he knows at that time to be the subject of a disqualification order or disqualification undertaking…”
Other Proceedings, including Misfeasance Claims could also be brought
Unfortunately for Mr Onions and the others it perhaps does not stop there as the liquidator could also bring proceedings, perhaps to include for Misfeasance (click here for more on misfeasance claims) and other antecedent transaction claims, such as Wrongful Trading.
NDP can help if you are faced with Director Disqualification
If you are facing a director disqualification investigation from the UK Insolvency Service, a UK based liquidator or administrator, or a creditor is threatening a misfeasance claim against you please do contact us or call us on 0121 200 7040 for a free initial chat so that we can assess your options. Alternatively, why not email us a scan of the threatening letter and we will call you back to discuss on a no-obligation/no-cost basis? We will work around you wherever in the world you are based.
The sooner you talk to one of our director disqualification solicitors the more likely it is that we can help. In our experience, acting positively and quickly is important and might help us eliminate the prospect of director disqualification, or result in a lower period of disqualification