Careless, deceitful, and delinquent company directors can expect to face disqualification proceedings if their actions cause creditors to suffer financial loss.
Disgruntled shareholders and creditors (the people and businesses you owe) may take action against a director suspected of misfeasance or another serious transgression. However, a licensed insolvency practitioner (IP) usually instigates Director Disqualification Proceedings.
Insolvency practitioners (IPs) play an integral role in business rescue and company winding-up procedures such as administration, CVA, and liquidation. As a result, it’s essential for the owners and directors of struggling companies to know and understand three things:
- IPs and lawyers earn by monetising the assets of insolvent companies (and their directors if necessary)
- IPs are licensed and regulated to protect creditors’ rights in administration and liquidation procedures
- Any IP you hire for a statutory insolvency procedure must prioritise creditors’ rights and interests over yours
Prepare for misconduct and Director Disqualification Proceedings
An IP is appointed whenever a company enters administration or liquidation. They must send a report on the directors’ conduct to the Government agency responsible for “…tackling financial wrongdoing and maximising returns to creditors.”
The Insolvency Service may investigate any of the company’s registered, former, shadow, or de facto directors if the IP’s report highlights improper conduct or mismanagement.
Four months ago, the agency launched a campaign targeting directors who used false information, and abandoned or dissolved limited companies following receipt of a Bounce Back Loan (BBL).
Is your business struggling with BBL or Coronavirus Business Interruption (CBILS) repayments? Or have you recently been:
- Accused of misconduct?
- Notified of disqualification proceedings?
If “Yes” is your answer to either question, it’s essential that you seek advice from an independent professional before proceeding. A director accused of wrongdoing could receive a criminal prosecution, and a ban from managing companies for up to 15 years. Contact us today on 020 7504 1300 for a FREE and confidential consultation.