The dispute can be settled either before or after Court Proceedings have been issued. If settlement means that the former director accepts a period of disqualification by way of an Undertaking, and Court Proceedings have already been issued, the former director will ordinarily be liable for some of the Insolvency Service legal fees.
If settlement is known to be likely before Court Proceedings are issued the former director should consider whether early settlement is a better outcome.
The main issues to be considered during an Settlement negotiation are the period of disqualification that the parties will accept and the basis of the agreed unfit conduct.
The appropriate period of disqualification ought to be considered in light of judicial principles as enumerated in previous court decisions.
The Undertaking will include an admission of the unfit conduct and it is an important document to get right. The admissions that are made in this publicly available document can potentially be relied upon by Liquidators in financial claims against the former director such as misfeasance claims.
In summary the following should be taken into account when negotiating settlement –
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