Tax and Insolvency Litigation Solicitor

Steps to prevent the start of a Directors Disqualification Investigation

Posted In: Director Disqualification


After a company is wound up the  liquidator will investigate the affairs of the company.

If it is apparent to a liquidator that the conduct of a director, in relation to the insolvent company, was “unfit”, he is required to inform the Secretary of State by reporting these concerns to the Insolvency Service.

On 22 February 2016 The Insolvent Companies (Report on Conduct of Directors) (England and Wales) Rules 2016 were laid in Parliament which will enable the Conduct Assessment Service, a new digital process, to replace a paper based reporting system which has been in place since the 1980s.

The new Conduct Assessment Service went live on 6th April 2016, when the secondary legislation came into force. This is an online tool which about 1,800 insolvency practitioners and also the Insolvency Service’s Official Receivers will use to report on director conduct.

Conduct reports will need to be submitted within 3 months of the company’s failure instead of the current 6 months. This will enable investigations to commence at an earlier stage than they are at the moment and should result in a reduction in the time taken to obtain disqualifications where they are in the public interest.

The move to online reporting will simplify the process for insolvency practitioners.


Directors may find that liquidators act out of an abundance of caution and out of a motive of protecting their own interests. Therefore, the threshold for conduct being reported can be low on a scale of wrongdoing.

If the liquidator makes a relevant report to the Insolvency Service there are steps that can be taken to discover the contents of the report.

However, the better course of action may be to try to work with the liquidator to ensure that no report is sent at all. Clearly, this strategy might only apply to cases where the conduct in issue is “marginal” and is less attractive where it is clear that a liquidator will have serious concerns from the start of the investigation.

If the former director does have a concern that some transactions may be considered questionable it may be prudent to correspond with the liquidator even where the liquidator has not raised any queries. This strategy may serve two purposes:


  1. It may allow the director to provide an acceptable explanation to the liquidator before he prematurely reports to the Insolvency Service;
  2. It creates a paper trail that may be valuable if director disqualification proceedings


This strategy can be executed with some simple correspondence, asking things such as –


  • Have you received all company records and documents
  • Holding receipts for all documents delivered
  • Enquiring whether any further assistance is required


Assisting the liquidator in this way will not be suitable for all cases but may be appropriate where there are questionable circumstances that are capable of resolution before the matter is passed on to the Insolvency Service. This is simply one of a number of “windows of opportunity” that exist through the life of a disqualification investigation that ought to be explored in bringing the matter to a conclusion.


To discuss the ways in which contact with a liquidator ought to be managed please contact expert director disqualification solicitor Stephen Chinnery by email or by phone on 07460 005 769.

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To further discuss any area of Director Disqualification with an experienced lawyer please contact us or call us on 07460 005 769.

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