Insolvency Service cracks down on rogue directors

13-06-2018

 

The UK has tightened its disciplinary regime for rogue directors, with the number of disqualification orders increasing to 1,231 in the past year.

A survey by Moore Stephens found that the number of orders against UK directors rose from 1,214 in 2016/17, while the average length of bans also increased from 7.5 to 7.7 years.

The top 10 firm says that the Insolvency Service’s lack of resources means that it has tended to focus on offences that are easy to prove and cheaper to investigate.

So, for example, the number of cases involving unpaid tax rose by 7% over the past year while the number of more expensive criminal cases fell by 37%.

Moore Stephens head of restructuring and insolvency Jeremy Willmont says that the Insolvency Service has managed to keep up the pressure on rogue directors, especially in high profile cases, but that more could be done if it had more staff and funding to investigate the most complex and time consuming cases.

“When a company is in financial distress, some directors may be tempted to break the rules to keep the business going a little bit longer,” he said.

“However, longer disqualification periods and the increase in disqualifications should persuade directors to seek professional advice before making any decisions that could adversely impact the rest of their careers.”

During the past year, the first of nine individuals being investigated by the Service over their involvement in the collapsed charity, Kids Company, has been banned from acting as a director. Sunetra Atkinson was disqualified for two and a half years https://economia.icaew.com/en/news/may-2018/former-kids-company-director-atkinson-banned for causing or allowing the charity “to operate an unsustainable model”.

The other individuals include chief executive Camila Batmanghelidjh, as well as former directors Erica Jane Bolton, Richard Gordon Handover, Vincent Gerald O’Brien, Francesca Mary Robinson, Jane Tyler, Andrew Webster and former BBC creative director Alan Yentob.

The Insolvency Service has also taken out proceedings against Dominic Chappell, who bought failed retailer BHS from Sir Philip Green for £1, and is seeking to ban him as a director for the maximum 15 years. 

Source: Economia