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Insolvency Service drop Director Disqualification investigation after finding that Director client did not breach terms of a CBILS loan scheme.

Director Disqualification specialists Sukhbir Mall and Tom Clinton explain the process involved.

NDP were instructed by a client who was being investigated by the Insolvency Service (‘IS’) for conduct that they alleged was in breach of her statutory duties as a director of a limited company, following the failure of her company. Had the investigation continued, a potential outcome could have been for our client to receive a director disqualification term of several years. This case study looks at the allegations against our client and how Sukhbir Mall and Tom Clinton were able to persuade the IS to drop their investigation.

The allegations against our client.

The IS alleged that our client had:

  1. Overstated her Company’s turnover when applying for multiple Coronavirus Business Interruption Loan scheme (CBILS) loans in order to obtain more funds than the Company was eligible to receive; and
  2. Caused discrepancies in accounting records and bank statements.

Once our client received notice from the IS that they were investigating her conduct as a director of the Company, she contacted our director disqualification specialists for advice and assistance in handling the matter.

Once instructed, we sought all the evidence held by the IS that they had relied upon to make their initial allegations against our client. Once received, Sukhbir and Tom inspected all the documents the IS had gathered during the course of their investigation, page-by-page investigating in detail the evidence that the IS was relying upon. Doing so enabled us to discover evidence that demonstrated the client had not acted in breach of their duties as a director. Consequently, it was clear that it was not in the public interest for the Secretary of State to seek to disqualify the client from acting as a director of a limited company for a number of years.

The steps taken to persuade the IS to drop the investigation.

Having examined the IS’s evidence and taken detailed instructions from the client, we began working on a letter of representations which set out the exact circumstances of events which led to the Company’s failure. That letter personalised matters for the IS, who as they always do, come in as strangers to a director’s company, because at this stage they have not met the director, talked to them or investigated the facts of the case in detail.

The letter detailed factors that the IS had not taken into account and demonstrated that had the IS considered those factors, they would conclude that director disqualification proceedings should not be brought against the client.

While the Insolvency Service is a government body, in our experience they can and do make mistakes. The key point here is that the IS has a duty to investigate and consider all the circumstances of a case;. We were able to show that this had not happened in this case, and consequently demonstrated the allegations made against the client had no merit so would fail in Court. The IS dropped their investigation having reviewed NDP’s representations made on the client’s behalf.

The client was overjoyed upon receiving notice that the IS had dropped their investigation into the client’s conduct, and thanked Sukhbir and Tom for their hard work and perseverance throughout the course of the investigation.

Contact us if threatened with a Director Disqualification investigation by the IS.

NDP’s diligent investigation of all the circumstances of this case caused the IS to reconsider and subsequently abandon their investigation. If you are facing a similar investigation into your conduct (or someone you know is) as a director by the IS or a law firm acting on the Secretary of State’s behalf, NDP are more than happy to assist you in dealing with matters in a pragmatic and measured fashion.

We have a strong record in persuading the IS to drop their investigations. Take a look at some more of our testimonials in the area of director disqualification. Call is on 0121 200 2040, or contact us, for an initial free of charge meeting with no obligation.