HomeFWJ TakeawayDirector disqualification claimsDealing with early Insolvency Service enquiriesWhat an individual should consider when faced with a disqualification claim

We have been advising directors facing disqualification since 2002 . Over that time we have dealt with 100s of different claims - each with their own particular set of individual circumstances. It is that experience which means we can genuinely find the right solution for each client, taking in to account all the moving parts which go in to each individual claim. There is no short cut to experience.

One of the most astute appointments I have ever made

A company director we successfully defended against disqualification

Individual circumstances are unique

We recognise that no two sets of individual circumstances are ever the same when dealing with director disqualification proceedings. Our ability to explore each unique set of circumstances is a vitally important part of deciding how best to deal with each individual director disqualification claim.

There are however a number of issues that we ask all new clients to consider and these are set out below. Consideration of these points is often very important in determining what your ultimate goal is and how best to achieve that goal.

Consider these points:

  • age;
  • business interests;
  • costs;
  • future prospects;
  • evidence against you;
  • witnesses; and
  • who else was responsible.

1. Age

Age can often be an important factor in determining whether to fight the threatened disqualification proceedings. If, for example, you are approaching retirement age, it may not matter so much to you whether you are disqualified. We of course appreciate that no one would choose to be disqualified, but if you are at retirement age with no intention in the future of taking part in a business at director level, then the cheapest way to dispose of the disqualification proceedings would be to agree to an undertaking.

Conversely, if you are younger and not near retirement age, then a disqualification order may have more far reaching consequences and on this basis alone you may wish to attempt to defend the threatened proceedings and/or lessen the term of a disqualification order.

2. Are you currently involved with other business interests?

If you are currently a director of one or more other limited companies (or involved in their management), then a disqualification order can have significant repercussions on those other business interests. If you have not obtained court permission to continue acting as a director in the event of disqualification, you will have to resign from all current directorships and will be prohibited from being involved in the formation, promotion or management of any business for the duration of the disqualification period.

For some individuals this is highly important. For others, it is less so as they restructure their affairs and run them as a sole trader. It is something you may need to consider.

3. Cost

Defending legal proceedings (or responding to the pre action correspondence) will involve legal expense if you instruct this firm. It is difficult to provide a guideline as to the likely costs without sight of the papers, but ordinarily to review the paperwork and send out a detailed response to the Insolvency Service at pre issue stage will cost in the region of £3,000. But it can have huge benefits moving forward such as

At the end of the day the Insolvency Service will always have deeper pockets than any client we act for although it is also true that funding is being cut from their budget in the current economic climate.

4. What are your future prospects?

Whilst no one has a crystal ball, consideration needs to be given as to what your future may hold. It may be that presently you are not involved in any other businesses at director or management level, but you should always bear in mind that a disqualification order will prohibit you from being involved at director level for the entire period of the disqualification order. Much can change over time.

Do you have anything in the pipeline in terms of business opportunities which might be affected by a disqualification order? If so, we need to consider how best to deal with this.

5. The evidence against you

It goes without saying that consideration needs to be given as to the specific allegations of misconduct against you and whether you consider them to be accurate or not. More often than not the Insolvency Service takes a “scattergun approach” in terms of allegations it makes against directors in the hope that at least one or more of them may stick.

Tactically it is often worth responding to each and every allegation if only to have as many as possible discounted which might lead to the claim being dropped entirely or the period of disqualification reduced.

You need to consider the evidence you face or questions raised and the more comments you can provide in advance of a meeting with us, the more productive that meeting will be.

6. Are there any other witnesses who may assist you?

In addition to the above points, it is important to know whether there are any other relevant people (such as ex employees / suppliers etc) who may be willing to assist your case by providing affidavit evidence.

The affidavits served by the Insolvency Service are normally based on their opinion of the documentary evidence it has in its possession. They rarely obtain first hand evidence from individuals previously involved at the liquidated company. Our experience shows us that you have a stronger chance of defeating the allegations or reducing the period of undertaking if you can obtain supporting affidavits from other relevant individuals.

7. Who else was responsible?

Were you the only director of the company or the only person involved in its management? If not, then it is often helpful to know whether those other persons are also threatened with disqualification proceedings or have been asked to complete questionnaires by the Insolvency Service.

Assuming there is no conflict with the other individual, it is always better to ensure that you adopt a coordinated approach in terms of your responses to the Insolvency Service. All your hard work can be undone if the other person, (often inadvertently), provides responses which actually make the position worse.

The above are just some of the issues which you should consider as they will form part of the initial discussion on any given case.

Our expert team of lawyers have decades’ combined experience helping directors with disqualification proceedings. Whatever your situation – do give us a call. We are genuinely the leading firm in the country doing this type of work.

Francis Wilks & Jones acted with great professionalism, responding quickly to my requirements, leading to an eventual withdrawal of the claim against me and my son. I am extremely grateful

A client who approached us just two weeks before the trial of a large director disqualification claim against him and his son

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