This article forms part of the Directors Disqualification process which is shown on the website as Part 1. They should be read in conjunction to better understand the process.
It is very important to cooperate and deal with all the enquiries from the liquidator in a timely manner. The report which the liquidator submits to the Insolvency Service is private and confidential. There are ways through appointing a representative to discover what matters were reported.
Always provide all the information requested in order that a report can be sent to the Insolvency Service. In cases where the Director’s conduct is found to be marginally unfit, it is likely that the liquidator will request a further interview with the Director to assess the reasons surrounding the failure of the Company. This may conclude that report to the Insolvency Service is not necessary.
In most cases the liquidator will have concerns from the beginning of the liquidation on what matters he will be investigating.
If, as a Director you are concerned about the company’s trading activities and certain transactions then it is advisable to communicate with the liquidator, providing mitigating circumstances together with explanations to support the transactions and reasons for your actions.
The Insolvency Service can take action against a disqualified Director where it is believed that the behaviour of the Director has caused losses to one or more creditors of the company. These powers were newly introduced in October 2016.
Statistics show that the most common reason for disqualification of Directors is debts due to the Crown departments and HMRC. It seems that in some cases other creditors, appear to have been paid or preferred in advance of the Liquidation. In some cases, the Director can be made personally liable against the HMRC dents by way of a Compensation Order.
For a director whose company is in compulsory liquidation, any antecedent transactions after the winding up petition is issued, are void unless permission from the Court is obtained ( Section 127 of the Insolvency Act 1986).
So that regular payments for ongoing trading activities are not treated as void and possibly recoverable from the Director by a future liquidator, a validation order from the Court would need to be sought. Time restrictions apply and so the application would need to be made in a timely manner.
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.
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