The allegations covered not keeping company books and records and trading to the detriment of the Crown.
“I truly thank the NDP Team who were directly led by Sukhbir and Richard for their tremendous support, skill and effort. The human support they offered was invaluable.“
In this testimonial, our client explains how two of our Director Disqualification solicitors, Sukhbir Mall and Richard Shepherd were able to convince the Insolvency Service (‘IS’) to discontinue proceedings commenced against our client, following the emergence of new evidence. This enabled a critical review of the case and led to a successful outcome.
We also look at some current trends in Director Disqualification and note that the legal landscape in this area was dominated in 2022 by investigations into Bounce Back Loan fraud, an area in which we have been instructed many times.
Our client sets the scene.
“Working as a Solicitor in a Magic Circle Law Firm, I never thought that I would be on the receiving end of or be a party to insolvency litigation. That is precisely what happened.
I will always remember the moment I received a letter from Solicitors instructed on behalf of the Insolvency Service (‘IS’), following the liquidation of 2 of my companies. The letter made it clear that they were investigating my conduct as a Director of the 2 failed companies. The letter requested incredibly detailed information from me.
A lesson I learned early in my career was never to dabble in any area of Law that I had no experience in. For that reason, I contacted Neil Davies & Partners (‘NDP’), having researched the firm on the internet and considered their expertise in this field. Enquiries I made within the legal profession convinced me that NDP were the firm to represent me.
I contacted Sukhbir Mall, an NDP Director, and provided him with the background to the Insolvency Service’s allegations. He and his Senior Solicitor colleague, Richard Shepherd, represented me.
Both were very receptive and understood exactly where I was coming from and understood my objective, which was to avoid director disqualification at all costs.
They got up to speed with the background to matters very quickly and learned how I operated my businesses, which had to be placed into liquidation due to personal family circumstances. Detailed written representations were made to the IS by NDP, reminding and telling them of all the circumstances of the case. As strangers to the history of the 2 companies, the Insolvency Service needed to receive all this relevant information.
What occurred next were exchanges of correspondence between NDP and the Insolvency Service that included detailed answers to questions raised by the Insolvency Service and their Solicitors. My responses were carefully crafted with the input of Sukhbir and Richard.”
Director Disqualification proceedings were issued against me.
“Despite the representations and the co-operation provided to the IS, a decision was made by them to issue Director Disqualification proceedings against me. This was a serious development.
Along with the assistance of Sukhbir and Richard, I prepared detailed evidence in answer to the Director Disqualification claims issued against me.”
The allegations of unfit conduct
“The allegations being made against me were that:
- I ‘failed to ensure that my companies maintained and/or persevered adequate accounting records or in the alternative failed to deliver-up to the Liquidators such records as were maintained,’ and
- That ‘I caused the companies to fail to deal properly with their taxation affairs in relation to VAT, by failing to register for VAT and traded to the detriment of Her Majesty’s Revenue and Customs to the date of liquidation’.”
The trial date.
“The Secretary of State continued with the disqualification case against me, and the matter was listed for final hearing in March 2023.
As the Trial approached, the NDP Team advised me on a different and alternative strategy, considering the Secretary of State’s reluctance to discontinue the Director Disqualification proceedings against me.”
New evidence and the discontinuance of the case against me
“Sukhbir implemented the strategy which involved producing new, additional evidence to the Secretary of State. That new evidence was not available at an earlier point. It was vital that such evidence came out. This resulted in the Director Disqualification proceedings commenced against me being discontinued by the Insolvency Service.”
The Insolvency Service’s position
“The Insolvency Service received and carefully considered the new evidence from me. It did so in accordance with the obligation on the Insolvency Service, to review the position when new evidence is received. As a result, the Insolvency Service abandoned and discontinued the case against me.
Having heard the news, it made life bearable again. I resumed a normal relationship with my family, I could actually sleep and concentrate on making a living from my directorship position.
I truly thank the NDP Team who were directly led by Sukhbir and Richard for their tremendous support, skill and effort. The human support they offered was invaluable. Thank you all once again.”
Our Director Disqualification solicitors comment
“The need for a critical consideration of a case as it progresses is essential. Invariably matters can be overlooked and there is no bar for alerting the Secretary of State to any change of circumstances or introducing new evidence for him to consider ahead of the Trial.
Directors should ensure that they seek immediate professional advice, if faced with an investigation by the Insolvency Service with a view to Director Disqualification proceedings against them.”
Director Disqualification – some important trends and developments
- Bounce Back Loans (‘BBL’) inevitably (and rightly) dominated the Director Disqualification landscape in 2022. We imagine that will continue into 2023, given the enormous scale fraud perpetrated by many individuals on Covid funding.
- BBL misuse is attracting much wider attacks on Directors than just Director Disqualification, to include:
Stand-alone Criminal prosecutions alleging Fraud and Money Laundering allegations (also arising out of BAFO’s).
3. Where Director Disqualification is alleged out of BBL misuse, the Director is looking at:
- A disqualification period of disqualification of 10 to 12 years.
- A Director Disqualification Compensation Order (‘DDCO’) – only available when a Disqualification Order is made.
Plus, these old favourites
4. The Insolvency Service continues to pursue Unfit Conduct allegations of:
Books and records allegations – failing to maintain and/or failing to preserve and/or failing to deliver up to the Liquidator.
Directors need to be ever more careful, as the IS appears to be highly active right now. The Director should go into every liquidation process ‘with eyes wide open.’ There is so much that can be done before liquidation to help ensure that IS investigations are avoided. Talk to our Director Disqualification solicitors for an initial discussion – or call us on 0121 200 7040.