Four directors disqualified for failing in their legal duties

Four directors have been disqualified from running a company for up to 11 years after failing to carry out their legal duties.

The two men and two women ran a gaming company that was placed into administration in April 2014, with an estimated deficiency to creditors of £1,190,744.

An investigation by the Insolvency Service found that the two men had breached the conditions of an Invoice Factoring Finance Agreement to the ultimate financial detriment of the provider.

The two women did not dispute that they abrogated their duties as directors by taking no part in the management of the company in the run up to the administration, thus allowing it to breach conditions of the factoring agreement.

Commenting on the case Rob Clarke, Head of Insolvent Investigations North, said: “In this case the directors arranged for creditors to pay £312,741 to the company rather than pay the factor who had advanced funds against the invoices causing losses to the factor.

“It is no defence to state that directors had no role in the company, those appointed are responsible regardless of their level of involvement.

“The protection afforded by limited liability is based on company directors meeting their duties and obligations and if they fail to do so, this protection will be withdrawn.”

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

• act as a director of a company
• take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
• be a receiver of a company’s property.

In addition that person cannot act as an insolvency practitioner.

Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of company law.