A Director Receives a Further Director Disqualification for Acting as a Director Whilst Already Disqualified.

This article demonstrates how seriously the Insolvency Service views a breach of an existing director disqualification period, and suggests a possible way of avoiding a further disqualification period.

According to a recent press release from the UK Insolvency Service a Mr Glen Dean Crosthwaite (‘Mr Crosthwaite’) was found to have acted as a director (whilst already disqualified from acting as a director) of UK Recruitment Staff Ltd (‘the Company’) despite his resigning and appointing another person as a director.

Mr Crosthwaite gave a director disqualification undertaking to the Secretary of State for Business, Innovation and Skills not to act as a director for a period of eleven years. His existing director disqualification undertaking was for 6 years, and was due to end in 2018.

During the investigation it was found that Mr Crosthwaite was the sole person in charge of the Company bank account and the company’s dealings with HMRC.

Assisting a Disqualified Director is a Serious Offence

A Mr Darren Reece Ashford (‘Mr Ashford’), the person appointed director of the Company by Mr Crosthwaite, was given a director disqualification undertaking for five years for his conduct in allowing/assisting Mr Crosthwaite to continue to run the business whilst Mr Crosthwaite was already disqualified as a director.

In addition, Mr Crosthwaite and Mr Ashford were also found to have allowed the Company to have traded to the detriment of HMRC.  No payments were in fact made to HMRC by the Company.  The directors and their associates on the other hand, were found to have received more than £107,000.00. The overall deficiency to creditors in the Company was £162,981.00.

As Robert Clarke, Group Leader of Insolvent Investigations North said:

“Directors who ignore disqualification undertakings that they have previously given, and those who provide cover for them, to allow them to continue to run limited companies will be vigorously pursued by The Insolvency Service. The length of the undertakings in this case sends a clear message to the business community that such actions will not be tolerated.”

In addition, to any potential recovery action that the UK Liquidator is taking against them, Mr Crosthwaite may also be prosecuted for breaching his earlier disqualification, and both Mr Crosthwaite and Mr Ashford may be held personally liable to repay the company debts.

The Director Could Have Applied for Permission to Act as a Director Whilst Disqualified

These disqualifications go to show the risks a disqualified director can take by being found to be acting in the management of a company whilst disqualified.

Given that Mr Crosthwaite was, according to the press release, already serving a disqualification period of six years, instead of taking the risk he took he could have applied to Court for permission to act as a director whilst disqualified.  As director disqualification specialists, if you want to make that application to Court then please contact us for help and advice.

Whatever the position you find yourself in, if you are facing director disqualification, it is always the case that the earlier you speak to us the more likely it is that our specialists can help.   Please contact us or call us today, on 0121 200 7040, for a free no obligation chat.