Some people like Mr Allan Jeffrey Court. Mr Court was a director of Project Two Services Limited, which went into administration in 2004. In November 2006, he was disqualified from acting as a director of a company for a period of 3 years and 6 months. At the same time he formally resigned as a director of another company in which he was involved, Ducal Building Services Limited.
Ducal went into liquidation in March 2010. On investigation, it was found that Mr Court had controlled the company’s finances and decided which invoices would be paid. When the company had been sued in 2008, it was Mr Court who dealt with the proceedings. What’s more, he had received more remuneration than the registered director.
The Court decided that, although Mr Court, was not registered as a director at Companies House, in fact he was a director and had been concerned in the management of the company. He claimed that he simply had not understood what he could and could not do as a disqualified person, but the judge concluded that his conduct had been deliberate and intentional, and that he was financially competent. She decided that 8 months in prison was appropriate. Mr Court also had his disqualification period increased.
The lesson here for directors is that someone who is banned from being a director, either because of a disqualification order or by being bankrupt, can’t get around the law by simply registering someone else as a director at Companies House, but otherwise carrying on regardless. Anyone who flouts disqualification restrictions can expect a harsh penalty.
The lesson for creditors is that they should not just ignore insolvency procedures. Creditors may have information about the way failed companies have been run which might otherwise not come to light. When faced with the insolvency of a customer there is a temptation for credit managers to lose interest, assuming that any dividend is likely to be a few pence in the pound at best. By engaging with the insolvency practitioner, creditors can ensure that wrongdoing is identified and dealt with, and that potential assets may be traced and realised.
Whichever side of the fence you sit, we can help. If you’re involved with a company that’s struggling, we can provide clear, jargon-free advice to ensure that any personal liabilities are avoided or at least mitigated. If you’re a creditor we can help ensure that delinquent directors are brought to book, and our insolvency claims management service can free you from some of the administrative drudgery of dealing with your claims – usually at no cost.
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