The Administrator, Or Liquidator Completes A D Return. Alternatively, D Report On The Conduct Or Misconduct Of Directors.
The directors of any company which enters into Administration, or Insolvent Liquidation, will be the subject of A D Return or D Report. This report which is submitted to The Insolvency Service by the Administrator or Liquidator. A D Return will confirm that there is no evidence of misconduct.
During formal insolvency proceedings, an Administrator or Liquidator will send a D Report to the Secretary of State. This will detail the misconduct of all directors who were in office during the last 3 years of the company’s trading. It is possible even if you have resigned as a director, you will be part of the investigation for Director Disqualification.
The Insolvency Service Then Carries Out An Investigation Of Your Company And Your Conduct.
The Insolvency Service (acting on behalf of the Secretary of State) will decide whether it is in the public interest to begin investigation. The investigation will consider the actions of individual directors, and the company. If you have received a letter from the Insolvency Service, you may have seen a threat of disqualification when you received a formal questionnaire. This is to be completed seeking answers to questions on your failed company, and your conduct as a director.
Top Tip: It is important to respond carefully and properly to all questionnaires. Both as part of the liquidation and to the Insolvency Service as the response will determine the decision whether to pursue disqualification, and your responses may be produced in evidence.
Notice Or Pre-Action Letter (Referred To As A Section 16 Letter)
The Insolvency Service will consider if it to be in the Public Interest that a director be disqualified. If they think you haven’t followed or met your legal responsibilities as a director. If this is the case, they will send you a notice in writing of their intention to commence proceedings to disqualify you.
The notice will set out the grounds on which disqualification is to be pursued. Our experts can advise, and draft a response to the allegations made against you. The notice will set out:
- What the Insolvency Service think you’ve done that makes you unfit to be a director.
- If the Insolvency Service intend to start the director disqualification process.
- How you can respond.
Top Tip: We recommend you seek legal advice at this point. In our experience, directors who choose to respond to The Insolvency Service themselves, without having considered legal advice, can often have a detrimental effect on their case.
You Then Have Two Options Available moving forward into Director Disqualification Proceedings
A) Wait for The Insolvency Service to take you to court to disqualify you. You can defend the case in court if you disagree with their findings.
B) Give The Insolvency Service a ‘disqualification undertaking’ – this means you voluntarily disqualify yourself, and ends this action against you.
A second option is worth while if you have admitted that you have acted wrongly. This will mean that you are likely to receive lower penalty on the period of disqualification. This will complete the process much more quickly by lowering the set period of time.
It is advisable to seek expert legal assistance in negotiating the period. Terms of the Undertaking needs to be carefully considered, and agreed by the director. It is important to ensure the terms do not leave the director open to other civil, or criminal action.
Top Tip: If you choose to give a disqualification undertaking before the court proceedings are issued, you will receive a discount on the period of disqualification. The Insolvency Service will not seek to recover their legal costs from the director.
To make a free enquiry relating to a potential Directors Disqualification matter, call us today on 01908 414990. Alternatively, complete our Free Enquiry Request. A confidential and no obligation discussion, letting one of our expert team discuss your situation, and the options available with you.