HomeFWJ TakeawayDirector disqualification claimsDealing with early Insolvency Service enquiriesPre-action representations in a disqualification claim

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. Early advice is always sensible - it helps avoid mistakes and maximise your prospects of success.

If there was ever a star rating for law firms, Francis Wilks & Jones would score five stars plus. Professional and pro-active, they were able to understand my problem quickly, provide expert advice, outline a solution and put it into place with a successful outcome. I should have gone to them sooner

A client we successfully defended in director disqualification and insolvency related proceedings

Directors of UK companies are at risk of being disqualified from acting as a director thereafter where the company is placed into insolvency.

Where a limited company is wound-up by the court in the UK, upon the making of a winding up order they will receive (shortly after) contact from the official receiver attached to the court (where the winding up order was made) providing them with a questionnaire and inviting the director to an interview.

If there is more than one director, every director appointed as at the date of the winding up order will be approached in the same manner.

  • where a company is placed into voluntary liquidation, following a meeting of its shareholders and then its creditors (which will in a majority of cases not be an actual meeting and the resolutions passed by deemed consent) then the liquidator appointed has a statutory duty to report on the conduct of the director(s) to the Insolvency Service;
  • this duty is ongoing where further evidence is found which should be reported;
  • the same conduct report must be filed following the appointment of administrators over a company.

Initial interview and correspondence with the Insolvency Service

Where a winding up order is made, within a short period of time the Insolvency Service will send out a comprehensive questionnaire to the director and request that the director attend a meeting, although this can be by telephone.

The questionnaire will address areas such as

  • the company’s assets and liabilities;
  • its creditors’ details;
  • why the company failed;
  • the actions of the management; and
  • other areas which may lead to further investigations into the director’s conduct.

The director’s response, including the details completed within the questionnaire, assist the administration of the liquidation estate, including the collection of all assets and subsequent distribution to creditors. It is vital legal advice is taken prior to sending the completed questionnaire back.

Where the company has been placed into voluntary liquidation or administration, the appointed liquidator / administrator will report on director conduct matters only (as they deal with collection of the estate and distributions to creditors) to the Secretary of State/Insolvency Service.

Following such a report being filed, the Insolvency Service may carry out further investigations into the company’s affairs or, more commonly, immediately contact the director (which will be the first time s/he has heard from this agency in relation to their company) enclosing a questionnaire addressing the issues already raised.

Responding to the Insolvency Service

Under the Insolvency Act 1986 and associated insolvency legislation, a director of an insolvent company has a statutory duty to respond on and cooperate with all requests made by the official receiver / liquidator / administrator.

This is particularly important as, without a director’s cooperation, it would be extremely difficult to administer the insolvency proceedings.

  • it is often the case that a very cooperative director will respond honestly and with integrity to such enquiries, although they may be unaware of the risk that such honesty brings;
  • whilst a director has a duty to be cooperative, often it is the case that because of a misunderstanding on his/her part, or because of a misunderstanding on the part of the Insolvency Service, the response may lead to the issue of director disqualification proceedings.

As director disqualification proceedings are brought to protect the public interest, it is not the director’s credibility that is being examined, but rather they are looking at what happened and whether that is permissible.

For example, an honest but disorganised director may inadvertently discuss matters which are not strictly asked for in the questionnaire – and which might then trigger further enquiries.

Threatened disqualification claim

Irrespective of whether you have been engaged with the Insolvency Service in a long chain of correspondence, or whether you have ignored or replied little to their requests, if their investigations lead them to believe that the director is unfit and guilty of misconduct then they will seek to issue a director disqualification claim at court.

Before a director disqualification claim is issued, a notice of the intention to commence proceedings will be sent to the director under section 16 Company Directors disqualification Act 1986.

At this point, without legal advice or any further understanding of the legal regime, a director is faced with the stark options of either

  • offering a disqualification undertaking; or
  • facing the prospect of potentially lengthy and costly litigation proceedings which may still arise in their disqualification (and a bill for the Secretary of State’s legal costs).

Solicitor assistance can hugely help

It is not always the case that the threatened disqualification claim has grounds of success. In many cases the director has attempted to engage the Insolvency with little experience of this area. In other circumstances his/her arguments have assisted the Secretary of State and hindered his/her case.

The legal argument, and indeed the factual argument, is very different through a lawyer’s eyes. It is almost always the case that a director has claimed something that either was claimed in the wrong context or delivered in the wrong manner, without due care and attention being placed on the aspects which assist him/her.

As a expert solicitor in this area

  • where a disqualification proceedings have been threatened, we see many occasions where the grounds for bringing such a claim are not founded on the evidence and it is only the director’s misunderstanding, or indeed the Insolvency Service’s inability to see his/her case, that has led to the disqualification claim being issued;
  • we can provide the objectivity needed to properly review the claim – and we have the necessary experience to really see if it has any merit.

At Francis Wilks & Jones we have considerable experience of director disqualification proceedings and writing letters of representation to correct any such misunderstandings and narrow the issues, which may ultimately lead the Secretary of State acknowledging that it is not in the public interest to issue a disqualification claim. Please call any member of our director disqualification team for help.

I was greatly impressed with the commercial, tactical and technical ability of the team at FWJ. They quickly got to grips with a complex set of facts and, through their hard work, had the proceedings against me dropped and a significant proportion of my legal fees repaid. I couldn’t recommend them highly enough

A director we defended against a disqualification claim and other claims brought by a liquidator

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