Hike in number of director disqualifications

The number of British company directors to be disqualified increased for the third year running to 1,231 in 2017/18, according to analysis from Moore Stephens which also shows that bans for disqualified directors are getting longer

The firm says that the continual increase in disqualifications shows that the Insolvency Service is keeping up the pressure on rogue directors and limiting the damage they can do to clients and creditors. 

It reports the courts have also been taking an increasingly tough line with disqualified directors, with the average length of bans increased to 7.7 years in 2017/18, from 6.9 years in 2011/12.

Jeremy Willmont, head of restructuring & insolvency at Moore Stephens, said: ‘Despite the overall increase in disqualifications, the Insolvency Service needs more resources to tackle the problem.’

Moore Stephens says an increase in funding would allow the Insolvency Service to tackle more complicated and time consuming cases, arguing that the focus has been on offences that are easy to prove and cheaper to investigate such as unpaid tax (up 7% in last 12 months) in contrast to more expensive criminal cases (down 37% in 2017/18).

In the last month, Sunetra Atkinson, former director at failed charity Kids Company, has been banned from the boardroom for two-and-a-half years for her involvement in the collapse of the charity. The Insolvency Service is continuing disqualification proceedings into the other eight directors, and has also announced proceedings against Dominic Chappell, the former owner of BHS, seeking to ban him from holding a directorship for 15 years.

Willmont said: ‘Despite a lack of resources, the Insolvency Service is keeping up the pressure to root out rogue directors particularly in relation to high profile 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. 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.’

Report by Pat Sweet

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