Defending Director Disqualification Proceedings – Alleged Financial Misconduct

Defending Director Disqualification Proceedings – Alleged Financial Misconduct

Our client was a Director with a successful recruitment business based in London but with strong International links and an extremely bright future.  The client Director was threatened with Director Disqualification Proceedings as a result of alleged financial misconduct regarding, amongst other things, his Director’s loan account.

We were instructed at the Questionnaire stage and made representations to the Insolvency Service as to why the Director should not be disqualified, namely because the Director’s loan account figures were incorrect as the company’s accountant had unfortunately used the Director’s loan account to “dump” a number of financial transactions that he was otherwise unsure where to place.  Despite these representations, the Insolvency Service pressed ahead and issued Director Disqualification Proceedings against the Director.  The Insolvency Service was seeking a 6-year Disqualification against the Director.

Avoiding Disqualification was particularly important to the Director as there was simply no way for him to step back from the business – he and the business were inextricably linked.  Even if he were to resign as Director, he could not avoid involvement in the management of the business, which is equally prevented by a Disqualification Order.  Disqualification would have meant the end of the business that he had worked so hard to build.

We were instructed to robustly defend the Disqualification Proceedings and, following detailed Affidavits from the Director, his former account and a forensic accountant (who had independently examined and recreated the company’s accounts), the Insolvency Service agreed to discontinue Proceedings against the Director and compensated the Director for the majority of his costs.

If you find yourself in a similar situation to the above, please contact Matthew Howat, head of our Director Disqualification team, on 020 7884 9700 or by email on to arrange a free consultation.

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