Director Disqualification Solicitors: What to Do If You Are Under Investigation
Director disqualification can affect your career, your business and your ability to operate companies in the future.
If you are being investigated following a company liquidation, or you have received correspondence from the Insolvency Service, you need to understand the risk quickly. The earlier you take advice, the more scope there may be to protect your position.
At Adam Benedict, we advise directors on disqualification risk, Insolvency Service enquiries, director conduct allegations and applications for permission to continue acting as a director.
What is director disqualification?
Director disqualification can prevent you from acting as a director or being involved in the management, formation or promotion of a company.
The UK Government states that disqualification can last for up to 15 years, and breach of a disqualification can lead to serious consequences, including a fine or imprisonment.
Disqualification commonly arises after a company has entered liquidation and questions are raised about the director’s conduct.
Why directors come under scrutiny
Directors may face an investigation where there are concerns about how a company was managed before insolvency.
Issues may include:
Failure to pay HMRC
Trading while insolvent
Payments to connected parties
Preferential treatment of certain creditors
Poor record keeping
Misuse of company funds
Unexplained asset transfers
Failure to co-operate with the liquidator
Director conduct before liquidation
We regularly advise directors on disqualification risk arising from company conduct and insolvency, including cases involving unpaid VAT, creditor liabilities and wider concerns about how the company was managed before insolvency.
Acting before and after liquidation
The best time to seek advice is before a company enters liquidation. At that stage, directors may still have choices about how to manage the situation, how to document decisions and how to reduce future risk.
However, many directors only seek advice after the company has entered liquidation and enquiries have already begun.
Adam Benedict advises directors at all stages:
Before liquidation, where there are concerns about creditor pressure or solvency
During liquidation, where liquidators are asking questions
After Insolvency Service correspondence, where disqualification action may be threatened
When an undertaking or disqualification order is being considered
Where a director needs permission to continue acting for a specific company
Section 17 applications
In some cases, a disqualified director may need to remain involved in a specific company.
This can happen where the company depends heavily on that individual’s knowledge, relationships, technical skill, leadership, or operational role. If removing that person would harm the company, employees, creditors or customers, it may be possible to apply to the court for permission to act.
Section 17 of the Company Directors Disqualification Act 1986 allows a disqualified person to apply for leave in certain circumstances.
Government guidance at this time also confirms that a person subject to a disqualification order or undertaking may apply to the court under Section 17 for permission to act as a director or be involved in the management of a named company.
Timing is critical
If you agree to a disqualification undertaking, the timeframe for acting can become very short. Where a director needs court permission to continue in a specific role, urgent action may be required. Our team can advise on the timing and preparation of a Section 17 application, including the evidence the court is likely to require.
Delay can limit your options.
Early advice can help you understand:
Whether disqualification is likely
How to respond to enquiries
Whether to challenge allegations
Whether an undertaking should be offered or resisted
Whether a Section 17 application is appropriate
What evidence the court may need
How to protect the business if you are central to its operation
Speak to director disqualification solicitors
If you are reading this because you are facing a director disqualification, liquidator enquiries, or Insolvency Service correspondence, act quickly.
Our solicitors can assess your position, help you respond strategically and advise on challenging allegations or applying for permission to continue acting as a director under Section 17.
Protect your position before your options narrow. Contact us today to arrange a consultation.
