Insolvency Litigation – What Punishments Might Follow From a Public Interest Winding-Up Order?
In a recent press release the Insolvency Service confirm that Legal Support And Assistance Limited (‘the Company’), was compulsorily ordered into liquidation and wound-up on a Petition presented by the Secretary of State for Business following an investigation by the Insolvency Service, on the grounds of public interest.
The press release notes state that the sole director was a struck-off solicitor (a Mr. Gerard Hyde) dating back to December 2008. The Company was found to have inadequate accounting records meaning that the Insolvency Service were unable to establish what all of the Company’s transactions related to, amounting to several hundred thousand pounds.
Most of the transactions related to entities that appeared to be connected with a Mr. Kevin Sykes, an undischarged bankrupt from April 1993 and whose discharge remains suspended to date. Mr. Sykes was also disqualified as a director for fifteen years from 2nd November 2005 following a conviction for admitted fraudulent trading.
This article looks at how this case is possibly now going (one would imagine) to raise all sorts of insolvency litigation and director disqualification issues for Mr. Hyde, following the winding-up of his company, and recommends that as Insolvency Litigation and Director Disqualification specialists we can help if you are faced with such difficulties.
The possible Insolvency Litigation and Director Disqualification issues that might arise
Fture issues for Mr. Hyde could possibly include:
- Problems with the Department for Business for the failure to keep accounting records which is a criminal offence with the punishment being a fine and or a term of imprisonment under the Companies Act 2006.
- As to the duty to keep accounting records click here. There is an example of a successful prosecution for a failure to preserve company accounting records where the Defendant received a term of four months imprisonment (suspended for a year) on the Department for Business criminal prosecutions page.
- The criminal Court could also impose upon conviction a period of director disqualification for up to 15 years against Mr Hyde under section 2 of the Company Directors Disqualification Act 1986 (‘CDDA’).
- Mr Hyde could find himself liable to confiscation proceedings brought under the Proceeds of Crime Act 2002.
- The Insolvency Service may also bring director disqualification proceedings to disqualify Mr Hyde as a director for a period of time in addition to any period of disqualification imposed by any criminal Court (as noted above).
Further Insolvency Litigation Issues
Unfortunately for Mr. Hyde, the possibility of further insolvency litigation procedings does not stop there – in addition:
- Mr. Hyde may ultimately be found liable in due course to a liquidator pursuant to section 212 of the Insolvency Act 1986. That is Mr Hyde could be said to have: “…misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the Company.” That is so that he is liable to repay any monies.
- In addition to or in the alternative, the evidence may show that Mr. Hyde acted “…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 to be an undischarged bankrupt” In which case pursuant to section 15 of the CDDA were such a finding to be made, Mr. Hyde may be found to be personally liable for all the relevant debts of a Company. Therefore creditors of the Company may be able to make Mr Hyde personally liable for the Company debt.
We can help with Criminal and Civil Proceedings in these matters
This article shows the severe and on-going penalties that can be imposed following on from a public interest winding-up order. If you are being prosecuted or confiscation proceedings are threatened then please contact us immediately or telephone us on 0121 200 7040 and ask to speak with one of our insolvency litigation solicitors, David Hanman or Stephen Chinnery in particular. See Our People for their details.
Alternatively, if you are being threatened with director disqualification proceedings, proceedings brought by creditors personally or even threatened proceedings for misfeasance there are options available for the well advised director to help deal with these threatened proceedings. Contact us and ask to speak to Neil Davies.
The earlier you speak to us the more it is likely we can help. Not least we may be able to keep you away from the stress and cost of going to Court. Please call us today on 0121 200 7040 for a no obligation no cost initial chat as to your options.
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