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Director Disqualification investigations into Directorial conduct – how to defeat allegations of unfit conduct

Our client said: “NDP convinced the Insolvency Service that the Secretary of State did not need to take director disqualification proceedings against me….. I can now get on with my life.”

In this testimonial we feature a case we recently resolved for our Director client, who, much to his surprise and concern, was being investigated by the Insolvency Service (‘IS’ ) for unfit conduct which, if proven, could end up in director disqualification. We detail the circumstances that led to the investigation and the steps we took to successfully persuade the IS to abandon their investigation.

(Article by: Neil Davies, Director Disqualification Solicitor and Managing Director of N D & P Solicitors Ltd (‘NDP’) and Contributory Editor to Mithani: Directors’ Disqualification’ – the leading work on Director Disqualification law and practice.)

The allegation of Unfit Conduct

The IS’ alleged that our Director client caused his company ‘to trade with knowledge of insolvency to the ultimate detriment of creditors over a 24-month period before liquidation’.

Our client explained to us that:

“The ongoing effects of the Covid pandemic had caused profitable contracts that had been entered into with my company to be delayed and pushed back numerous times, and eventually cancelled, meaning that my company could no longer trade. I was forced to put my company into liquidation as there was no ability to pay creditors.

I was shocked when some months after liquidation I received notice from the Insolvency Service (‘IS’) that they were investigating my conduct as Director of the liquidated company. I tried to comply with their requests throughout their investigation process and did my best to demonstrate that I was always acting in the best interests of the company.

Despite my best efforts to convince the IS that I had not acted to the detriment of creditors of the company, the IS persisted with their investigation into my conduct.”

Instructing NDP’s Director Disqualification Solicitors

“I found NDP on the web. I decided to get in touch with NDP to seek legal advice as they clearly had significant experience in dealing with such allegations and IS investigations.

I had become overwhelmed by the IS investigation and proposed litigation. I spoke with Neil Davies and his trainee Solicitor, Tom Clinton. They explained the process to me and listened to my concerns. They set out how they were going to respond by a letter of representations to the IS, intended to demonstrate that I did not act to the detriment of creditors and that I did not cause the company to continue to trade whilst insolvent.”

What did NDP do?

“I met by Zoom meetings with Neil and Tom who wrote to the IS setting out the full circumstances that led to the liquidation of my company and demonstrating that my conduct was not that of a delinquent Director.

NDP’s letter of representations detailed in full why the IS allegation of Unfit Conduct did not meet the legal standard of ‘Unfit Conduct’ and made clear that my actions as a Director did not warrant a period of disqualification to be imposed upon me. The detail in the letter and its presentation was very impressive.

I was guided and advised by Neil and Tom through the process.  I felt confident that NDP were putting the strongest case possible forward to the IS by detailing in full the circumstances which led to my company failing.”

Outcome – the IS decided to abandon their investigation

“NDP convinced the IS that the Secretary of State did not need to take disqualification proceedings against me. The IS investigation was abandoned.  This was an incredible relief as I depend on being able to be a Director to earn a living.  NDP put forward material that I had not (wrongly) considered relevant.  They did so in a coherent, persuasive way that the IS clearly recognised and understood.

I cannot thank Neil and Tom enough for their hard work in getting a positive result. Their experience and legal knowledge was invaluable and I am convinced that their ability to identify key points to target in my case, led to the Secretary of State abandoning its investigation into me.

Thanks to NDP’s excellent work, I can now get on with my life. I have no hesitation in recommending their services to anyone that finds themselves in the same situation as me.”

NDP Director Neil Davies said:

“As ever, only the Director ‘who lived the story’ truly knows all of the circumstances of the case.   The IS needs to receive all of this material and information in a coherent and persuasive way, so it can make informed decisions.

Here, once that happened, the IS quite properly concluded it was no longer ‘expedient in the public interest’ (the legal test) to continue its investigation.

The objective in such a case must always be to address and respond to the specific stated concerns of the IS, using all tools available to achieve that, including:

  • A deep understanding of Insolvency Law and procedure.
  • A deep understanding of Director Disqualification Law and procedure.
  • What we consider to be our unrivalled expertise and experience in this specialist field of law.

The ‘IS’ does abandon Director Disqualification investigations

It sometimes surprises Directors to learn that the IS does abandon investigations, when it receives evidence and material that demonstrates it should do so.

In our experience, the IS regularly abandons investigations, when persuaded that there is no case to answer.  The key is in the persuading.”

If you are facing an IS investigation into your conduct as a director and are concerned about the possibility of director disqualification, then please contact us or call us on 0121 200 2040 immediately. The sooner we are instructed the more we can do to help. The initial discussion is free of charge and without obligation. Click here to see more of our testimonials.