HomeFWJ takeawayTakeawayDirector disqualification claimsDiscontinuance of disqualification proceedings

We have been helping directors successfully defend disqualification proceedings since 2002. In that time we have helped 100s of directors deal with the claims and get on with their lives. We can help find the best solution for you too.

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Where disqualification proceedings are threatened against a director / former director, then they will have had an opportunity already to negotiate with the Insolvency Service and explain their conduct and why disqualification is not appropriate.

Despite this, the Insolvency Service can still decide to press ahead with a claim. If this happens, there are three main options which can be adopted

1. Do nothing

If you do nothing (including not offering a disqualification undertaking) then a disqualification claim will be issued against you and a disqualification order made on a summary basis at the first hearing.

2. Offer a disqualification undertaking

A disqualification undertaking will be offered to all directors under cover of a section 16 letter sent to them prior to the issue of proceedings. If this is accepted, no legal proceedings will be issued but the director faces other risks.

3. Defend the disqualification claim

Defending a disqualification claim is not without risks but may be the only way to seek a fair analysis of your case. This will entail a fully litigated set of lengthy proceedings which could last for in excess of a year and as much as two years before the matter is subject to trial.

Will the case proceed to trial?

It is not always the case that, once the litigated court proceedings commence, a defended director disqualification claim always ends up at trial.

As with any litigation proceedings, either side to the claim may

  • seek to change their case;
  • issue applications for various requests; or
  • seek to strike out the other party’s claim or defence

well before any full trial is listed to be heard.

Settlement is also an option as, with many other litigated cases, the process of a court case leads to new revelations, new witnesses with other information appearing or a general desire from both parties arising from the escalating costs and alterations to their original cases (although this is less common in disqualification proceedings).

Discontinuance of the claim by the Secretary of State

It is unusual, yet also not entirely common, for the Secretary of State to try and withdraw from disqualification proceedings after it has been issued.

This may be as a result of

  • evidence arising in the director’s defence evidence which presents a new version of the case; or
  • new legal advice considerably alters the strength of the disqualification claim (as it was considered pre-issue of proceedings); or
  • the costs of the claim to the public of going to trail are so large that it is not considered to be in the public interest to incur further legal costs. Remember – this is tax payers money being used to bring these claims.

Where the Secretary of State discontinues a disqualification claim against a director, the director(s) will be entitled to seek recovery of all of their legal costs expended in this matter (including those spent pre-issue).

Undertaking by the director

A director cannot discontinue a disqualification claim – as set out above and here the only alternative to being disqualified by an order of court is by offering a disqualification undertaking.

  • once proceedings are issued, the opportunity to offer a disqualification undertaking is not lost – at any time (even during the course of the trial itself) a director can offer a disqualification undertaking to the Secretary of State;
  • in some scenarios a director may choose to incur the cost of defending a disqualification claim through to the eve of trail (or almost) and then, if the proceedings are continuing to trial, offering an undertaking prior to trial;
  • this has several benefits such as
    • allowing the director more time to get his/ her affairs in order;
    • being able to negotiate a lower overall period of disqualification.
  • however, accepting an undertaking after proceedings have been issued normally means that the director will have to pay the legal costs of the Secretary of State up to that stage.

At Francis Wilks & Jones we have considerable experience of Director disqualification matters and defending directors in legal proceedings, as well as the above tactical considerations and many more. In a majority of cases where we have represented directors at trial, the defence has been successful. Let out experts help you.

Over the ten years we have worked together, FWJ continue to achieve exceptional results year on year. Andy Wilks and the team have been a pleasure to work with and have always provided pragmatic, commercial and accurate advice on a wide range of matters. FWJ have become an integral part of our business and we cannot recommend them highly enough.

A longstanding client whom we have advised on various matters

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