10 Year Director Disqualification for Acting as a Company Director Whilst Bankrupt
The penalties for acting as a company director whilst bankrupt are severe, as this case shows, in which the director in question accepted a 10 year director disqualification undertaking. Full details are in a press release issued by the Insolvency Service, in respect of an investigation carried out into the conduct of Peter Henry Nicholson (‘Mr Nicholson’) as Director of Tandem Print Solutions Limited (‘the Company’). Here we look at the background to the case and comment on what steps Mr. Nicholson could have taken that might have helped him avoid the disqualification penalty.
Background to This Director Disqualification Case
On 14 May 2012, Mr. Nicholson was made subject to a bankruptcy order (‘Order’) which prevented him from acting as a company director for 12 months. Despite this restriction, Mr Nicholson was found to have been acting as a Sales Director of the Company from 1st June 2012 to 18th March 2014.
Mr Nicholson was acting in breach of his Order whilst director of the Company and so has since provided a director disqualification undertaking to the Secretary of State for Business, Energy and Industrial Strategy which now prevents him from being directly or indirectly involved in the promotion, formation or management of a company for ten years, beginning on 20 December 2016.
What the Insolvency Service Said
Sue MacLeod, Chief Investigator at the Insolvency Service, stated that:
“The Department for Business, Energy and Industrial Strategy will continue to uphold the integrity of the insolvency regime and will not hesitate to act if a bankrupt breaches the restrictions to which he is subject. This disqualification should act as a deterrent and warning to others who might be considering such breaches.
What Options Were Available Which Might Have Helped Him Avoid Director Disqualification?
This case is a stark reminder to bankrupt individuals that non-compliance with the restrictions that they are subject to may result in action from the Insolvency Service and a severe punishment.
The option available to Mr Nicholson, if he wished to act as a director whilst bankrupt, was to apply to Court for Permission to act as a Director and/or to be involved in the promotion and/or management of a limited company.
There is, of course, no guarantee that such an application would have been successful For Mr. Nicholson. It depends on each individual case, and we do not know all of the details and circumstances of this case. However, in the experience of our experienced director disqualification solicitors, such applications to Court can be granted, albeit subject to creditor approval, when the case is properly prepared with all relevant evidence being presented.
Our director disqualification specialists are well used to advising on such matters. If you have any questions regarding your bankruptcy order and capacity to act as a director please contact us or call us today on 0121 200 7040 for a FREE, no obligation initial chat.