Why the client needed our help
We were instructed on behalf of three individuals who were directors of a company which used GSM Gateway technology to offer landline to mobile solutions for clients in order to help reduce their mobile and telephone bills. Two of our clients were full time directors and the other individual was a non-executive director.
Director disqualification proceedings were issued against all three individuals with the Insolvency Service offering undertakings of eight years for each of the individuals. Each of our clients had moved on to take employment at new companies at the time proceedings were issued and as a result, it was important to them that in circumstances where proceedings could not be fully defended, we helped to put them in a position whereby the original periods of disqualification sought by the Secretary of State were reduced as much as possible so that they could chose to make an application to court to seek permission to remain as directors if they so chose at a later date.
How we helped
We undertook a very thorough review of all of the files in light of the director disqualification allegations against them by the Secretary of State. Those director disqualification allegations related primarily to the non-payment of Crown debt which had accrued in a relatively short space of time. The company itself traded for little over a year and during this time, monies owed to the HMRC rose quite substantially.
Part of our role was to undertake a very detailed reconciliation of the accounting position within the company in order to demonstrate that the allegations of trading to the detriment of the Crown were not as had been set out by the Secretary of State in its evidence. We also undertook and set out a detailed background into the running of the company and demonstrated the clients’ reasonable belief that HMRC debts would be paid as a result of activities they were taking to obtain new funding in to the business.
Unfortunately for our clients, as a direct result of the recession in 2008 the promised funding from a major financial backer to help develop the company (and which would have seen the company trade out of its difficulties) was withdrawn at the last minute which in turn precipitated the collapse of the company.
This process entailed taking detailed Affidavit evidence not only from the former directors but also from some of the funders concerned and other third parties.
As a result of our detailed evidence, the threatened disqualification period was reduced from eight years to five years for two of the directors and three and a half years for the non-executive director. All of these periods were in the lower bracket for director disqualification claims.
As a direct result of this, we then helped one of our clients make an application to court for permission to remain in his management role in his new company, thus enabling him to carry on his career. The reduction in the period of disqualification undertaking has also enabled the other two directors, if they so choose, to go back to court to seek permission to become directors again if the opportunity arises in the future.