Director Disqualification

We can help if you are threatened with Director Disqualification

The Director Disqualification team at NDP is headed by Neil Davies, an advisory editor to Mithani on Director Disqualification, and is made up of experienced Solicitors who have worked for the Insolvency Service and who have acted for and against the Insolvency Service. The Insolvency Service is the main body that conducts investigations into the conduct of directors at their companies.

The Insolvency Service has many powers, and when it threatens a director with disqualification, the threat must be taken seriously. We know what they want, what the best solutions for our clients are to avoid disqualification and how to achieve them. The key issue for a director facing a disqualification investigation is to act early to maximise the available options.

Contact us or call us 0121 200 7040, if you are being threatened with Director Disqualification. Have a look at some of our testimonials where we have helped directors of companies avoid disqualifiction.


Director Disqualification and Misfeasance Claims Against Directors are Increasing. 

5 Facts

Director Disqualification is on the increase. We know what the Insolvency Service wants and we know what the best solutions for our clients are and how to achieve them when facing director disqualification.

 

The key issue for a director facing a director disqualification problem is to act early, to maximise options.

Click here to see our 5 Helpful Facts about Director Disqualification and how to deal with it.


Seismic Changes to Director Disqualification Law are here under the Company Directors Disqualification Act 1986

  • The Small Business, Enterprise and Employment Act 2015 (‘SBEE’), which gained Royal Assent on 26th March 2015 introduced major changes to director disqualification law and practice, all of them weighted against the director in favour of the State. Click here for more details.
  • The number of director disqualifications and misfeasance claims against directors is increasing. Click here for more about what the Duties and Obligations of the Professional Adviser are in such cases. These duties, especially for accountants and auditors, are under increasing scrutiny.

We are regularly referred director disqualification cases by other Solicitors, Insolvency Practitioners, Accountants, local Law Societies and other professionals.  They know our expertise in this area of work and are content to entrust their clients to us.  NDP’s Solicitors have an enviable reputation for excellence in this field of work.

Director Disqualification is stressful and has serious consequences

From the moment the notification of investigation from the Insolvency Service arrives, the whole process is stressful. In addition, the cause of the investigation is usually due to companies facing a stressful insolvency or bankruptcy, perhaps through the non-payment of crown debt or other tax debts.

Being disqualified from acting as a director can have serious business and personal consequences for the director and his/her family. Acting positively as early as possible is vitally important, and allowing NDP to help may help the director avoid the prospect of disqualification, or result in a lower period of disqualification.

Contact us if you are under investigation

If the Insolvency Service is threatening you with a director disqualification investigation, call us now on 0121 200 7040 for a FREE initial discussion, or contact us online. The quicker you get in touch, the more we can do to help.

Director Disqualification is a detailed and complex area of law. For a list of questions that we are frequently asked in this area (FAQs), and their answers, click here.

See below for the areas that we can help you in if you have a director disqualification problem, and click for testimonials from our clients and case studies of our work.

Dealing with pre-action correspondence

The first contact from the Insolvency Service may be a pre-action letter from the Insolvency Service or its solicitors, threatening the commencement of Director Disqualification proceedings. How should you respond to such a letter?

  • Don’t ignore it.
  • That letter gives a time limited opportunity to the director to make representation (in writing or in a meeting) as to why disqualification is not necessary or in the public interest – use the opportunity.  NDP’s Solicitors are well used to maximising this opportunity to best advantage for the director.

This pre-issue period is, in most cases, a time when you can tell your story to the Insolvency Service, in a structured and coherent way, without any risk that you will be responsible for the opponent’s costs.

If you have any documents or witnesses that you believe assist your case, now may be the time to produce them and their evidence to your opponent.

NDP’s Solicitors are well used to dealing with all of the above issues. Contact us for help and advice.

Advising you as to the merits of the claim and your options

Obtaining and interpreting the opponent’s written evidence, to be relied upon against the director, is the key to matters.  Sometimes, the opponent’s case can be dismantled and the opponent persuaded to abandon the case, even before the client tells us his side of the story.

We know that the Insolvency Service may not even know your history or the reasons for the company failure at this point or of your experience with the Insolvency Practitioner who dealt with that failure. Contact us for help and advice.

Defending disqualification proceedings, where appropriate

NDP Team members have for over 25 years handled a myriad of fully contested defence cases, from the more routine to the most serious and high profile cases.  We know each case is unique and we treat each case accordingly.

NDP has won many cases and persuaded the Secretary of State to abandon proceedings on many occasions.   The client’s legal costs have often been recovered from the opponent on such occasions. Contact us for help and advice.

Negotiating settlement by Undertakings

Team members regularly negotiate Undertakings and negotiate lower periods of disqualification than that sought by the opponent.  That lower period is often crucially important to the client.

The maximum period which a person can be disqualified by way of an Undertaking is 15 years. The minimum period is 2 years. There are 3 distinct “brackets” of disqualification within this range.

  • 2-5 years – this is known as the “lower bracket”
  • 6-10 years – this is known as the “middle bracket”
  • 11-15 years – this is known as the “higher bracket”

Subject to the “gravity” of the offences giving rise to the allegations of unfitness, an individual will face disqualification in one of those 3 categories.

If a person who is already subject to an Undertaking or formal court imposed Director Disqualification Order then agrees to a further voluntary Undertaking for a second “offence”, the Order shall run concurrently (Section 1A(3) of the Company Director Disqualification Act 1986).

The Secretary of State will nearly always accept a Disqualification Undertaking if one is offered, providing that 2 main conditions are met:

  1. The Secretary of State must be satisfied that the person offering the Undertaking is or has been a director of a company which has at any time become insolvent and that the conduct of that person as director of that company makes him unfit to be concerned in the management of a company.
  2. Secondly the Secretary of State must believe that it is in the ‘public interest’ that he should accept a Disqualification Undertaking instead of applying or proceeding with an application for a formal Disqualification Order.

Contact us for help and advice in this area.

Attending meetings with you and the opponent

Sometimes a meeting (whether before or after the commencement of proceedings) with the Insolvency Service or its solicitors is important, not only to get the director’s side of the story across but also to give the director a chance to ask questions of the opponent.  The meeting may significantly reduce the chances of proceedings being commenced or of you being disqualified.Contact us for help and advice.

Applying to Court to obtain permission to continue as a director even if you are disqualified

NDP Team members regularly make successful applications to the Court to obtain permission for the director to continue as a director, even once disqualified.  We know what the Court and the opponent wants in order to ensure such applications stand the maximum prospect of success.

NDP will only advise a director to apply for permission to continue as a director if upon consideration of your case it appears there is a reasonable chance of success.  The NDP Team can maximise your prospects of success by being involved in your case as early as possible, so that the precise wording of any Undertaking you give to the Insolvency Service and the length of disqualification period is as favourable as possible.

As a rule, the longer the period of disqualification, then the harder it will be to obtain permission and the more conditions that may be imposed on that permission.

How to apply for permission to continue as a director

In terms of seeking permission from the Court to continue acting as a director (or being involved in the management of an existing business), the procedure is governed by the Practice Direction on Director Disqualification Proceedings which came in to effect in April 1999.

Step 1 This involves preparation of evidence in support of the application. This will consist of drafting Affidavits (a type of written statement) in support of your application. These will need to exhibit all supporting documentary evidence backing up or referred to in your written statements.

Step 2 If you are already subject to a Director Disqualification Order, the application is commenced by filling out a Claim Form. If you are subject to ongoing proceedings, it is done by way of an Application Notice. Attached to the Application Notice or Claim Form will be:

  • a draft of the order you are seeking from the Court.
  • A list of the proposed conditions you agree to give as part of permission being granted by the Judge.
  • Sworn copies of all your finalised written evidence.

The length of the hearing will depend upon the volume of evidence to be heard and the attitude of the Secretary of State to the application.

Step 3 Serve the Application Notice, draft Order and finalised evidence on the Secretary of State (or its solicitors if they have one) at least 3 clear working days before the date of the hearing (although longer is always better as there are always pre-hearing negotiations).

Step 4 Enter into negotiations with the Secretary of State (or its solicitors) as to the terms of the draft Order you are seeking and look to reduce any differences between the parties. This is a vitally important stage as otherwise you can be bound by very onerous conditions as part of being granted leave to remain a director despite disqualification.

Step 5 Attend the hearing and present the case to the Court. This will need to be done by a Barrister skilled in this area of the law. At NDP we have excellent relationships with Barristers experienced in this area of the law.

NDP’s Solicitors are well used to dealing with all of the above issues. Contact us for help and advice.

If you or your business is experiencing director disqualification problems in any of the areas detailed above, contact us for a FREE initial consultation.

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