Tax and Insolvency Litigation Solicitor

I have received a letter from the Insolvency Service telling me that I am about to be disqualified

Posted In: Case Studies, Director Disqualification

Being told that you are about to be disqualified from acting as a company director is not a happy day. Where the Insolvency Service recommend to the Secretary of State for your disqualification to act as a company director they should required to write to you and tell you about this.


Section 16 (1) of the Company Directors Disqualification Act 1986 (“CDDA”) makes it compulsory for the Insolvency Service to do this


The letter will often be entitled “Notice Pursuant to Section 16 of the Company Directors Disqualification Act 1986 (“CDDA”) of intention to commence proceedings to disqualify you”.


At this stage your mind may go back to that very cordial meeting you had with the Insolvency Service investigator several months ago that you thought had put an end to any suggestion of wrongdoing.


How will I know that a disqualification investigation has started?


An Office Holder of an insolvent company must file a report with the Insolvency Service within 6 months of their appointment about the conduct of directors.   This requirement arises in section 7(3) of the Company Directors Disqualification Act 1986


If the Insolvency Practitioner concludes that the directors conduct was “unfit” he is required to tell the Insolvency Service what his/her concerns are.


This report is called a “D1” and is commonly referred to as a “D-Report”. It is a private communication and cannot be obtained in any public forum. However, you will be able to infer its existence by the very fact that the Insolvency Service have written to you. It is recommended that you obtain legal advice from a specialist directors disqualification solicitor about the ways in which to secure a copy of the D-Report.


My options after receiving the section 16 CDDA letter


The section 16 letter will normally tell you several things. It will tell you –


  • Who else the Secretary of State intends to commence proceedings against. These may be your fellow directors or other people acting as shadow or de facto directors
  • It will describe in some detail the allegations of unfit conduct relating to your time as director of the insolvent company
  • It may invite further representations from you to respond to any of the allegations
  • It may invite you to seek a copy of the draft evidence produced against you
  • It will tell you of the period of time that the Secretary of State will suggest to the Court as being appropriate for a disqualification order
  • It will invite you enter into a disqualification undertaking, which has the same effect as a disqualification order, without the requirement for court proceedings. A short discount is commonly offered and the best analogy to use would the reduction in sentence one would obtain by an “early plea” in a criminal case



At this stage the investigation has nearly concluded and litigation is waiting around the corner.


Windows of opportunity to change the mind of the Insolvency Service and Secretary of State are closing fast but they still exist.


As the best cure for any illness is prevention so the best outcome at this stage of events is to halt the investigation before court proceedings are issued. This should be the entire focus of your efforts at this stage for which specialist advice is essential.

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