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Individual Accountability Services

Individual Accountability

Disqualification of company directors

If you are a director of a company, either on the verge of insolvency, or which has been declared insolvent, you are at risk of being held liable.

The duties which the law imposes on you as a director mean that in the wake of a corporate collapse you may be vulnerable to several lines of attack; allegations of fraudulent or wrongful trading, obligations to provide an account of your stewardship pursuant to sections 234-236 of the Insolvency Act 1986 and the threat of an investigation launched by the Official Receiver into the causes of the failure.

Such an investigation may culminate in an application by the Official Receiver or the Insolvency Service to the High Court to have you banned or disqualified from being a director on the basis that your conduct has made you unfit to be concerned in the management of any company. This is an application under the Company Directors Disqualification Act (CDDA). Whilst the application may allege that you acted either dishonestly or with intent to harm others, normally company directors disqualification litigation is about alleged incompetence. For example, that you operated an unsustainable business model or failed to adequately supervise the day to day management. Occasionally, such disqualification proceedings may be brought against someone who was never a director of the insolvent company because it contends that they were a de facto director.

If a company whose affairs you manage is in severe financial difficulty, you should seek legal advice about the personal risks you face. If the company has collapsed and you anticipate that you may be held jointly responsible we have the experience and expertise to support you. More specifically, we can assist by helping you to avoid or defend an application for a disqualification order. We are experts in acting for individuals caught up in this situation; we know when it is wise to act robustly or sensitively, when to be pragmatic and when to seek a commercial settlement.