If you are a director of a company that goes into one of the different types of Insolvency it is often forgotten that the Insolvency Practitioner instructed to deal with the matter is obliged to report upon the conduct of the directors of the company to the department for Business, Innovation and Skills.
Based upon this report, as a director of the company, you may face an action against you personally by the Government to disqualify you as a director for between 2 and 15 years. Such an action can be brought if you are accused of any one of a number of possible actions of misconduct including: continuing to trade when the company was insolvent, failing to keep proper records and failing to co-operate with the Insolvency Practitioner.
The consequences of such an action can be personally and professionally devastating and most directors are unaware of the fact that even though they may not have taken an active role in the business for some time, this is unlikely to be a successful defence for them. It is therefore imperative that a director seeks professional advice as soon as difficulties arise in the company to minimise the possibility of such an action, which are often pursued rigorously by the authorities, against the director concerned.
Question: Are you a director of a company that is about to go into insolvency?
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