Director’s Disqualification process – Part 1

The Directors disqualification process is somewhat lengthy and can take up to 2 years.

When the Company is placed into a Creditors Voluntary Liquidation (‘CVL’) or administration it is the remit of the liquidator and the administrator to investigate the Director’s conduct into the company’s affairs.

A report is prepared to the Insolvency Service if the conduct of the director raises concerns. This report is a requirement under Section 7(3) of the Company Directors Disqualification Act 1986.

There are various matters surrounding the conduct of the director which must be included in this report, namely: –

• Has trading continued to the detriment of creditors?
• Has the director withheld funds due to HMRC in relation to Company taxes for ongoing trading?

• Are the company’s books and records maintained adequately in compliance with the Companies Act legislation?
• Are there any suspected wrongful and fraudulent transactions?
• Has any extortionate credit been obtained despite the company being insolvent?
• Have certain creditors being paid in priority to HMRC?

It is important that full cooperation is given to the Liquidator, ensuring that you are available for any meetings to discuss the Company’s affairs. It is the job of the Insolvency Service to review the report submitted by the liquidator on the investigations into the Company’s affairs and decide whether a disqualification action should be commenced against the Director.

The Insolvency Service makes its decisions on a case by case basis and we’ll decide whether it is in the public interest to issue the relevant application to court.

The period of disqualification can be anything between two to fifteen years. The legislation surrounding director’s disqualification requires expert advice and experience.

Next Steps

If you want to find out anything further about this topic then please feel free to call on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email vee@navigatebr.com.

This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.