If you’ve received a Section 16 letter, it means your conduct as a director has been investigated by the Insolvency Service working on behalf of the Secretary of State, and they obviously think there’s a case to answer.
It will be headed something like: ‘This is a letter pursuant to Section 16 of the Company Director Disqualification Act 1986’. It will summarise the allegations against you, and state that a director disqualification order is likely to result. It will offer you a voluntary director disqualification undertaking in lieu of formal legal proceedings.
It might also include a questionnaire for you to complete, asking about the people responsible for the management of the company and its finances, plus any external advisers that were involved, and specific details of any individual transactions under investigation, such as payment of HMRC liabilities.
Remember, director disqualification is intended to protect the public. So a common question may be: “In your opinion, why did the company go insolvent?” It’s critical to take advice before answering this type of question – it’s designed to trip you up so the Insolvency Service can bring proceedings against you.
Time is ticking
It’s important not to ignore the letter, and to seek the help of a specialist solicitor – immediately. (Someone like us, hint, hint!)
Here are some of the other urgent actions to take.
We acted for the director of a PLC. His bookkeeper/cashier had made a payment from one company that was in liquidation to another. It looked as though it had been done deliberately to save money. As a result, the director was at risk of disqualification.
After we investigated, we found that it was a genuine error.
We met the Insolvency Service and their solicitor for two hours to present the relevant correspondence, and managed to persuade them to withdraw court proceedings.
It’s critical to talk to a solicitor early.
If the director had seen us earlier, we could have helped him complete the initial questionnaire and the case might never even have gone as far as court proceedings.
What this means to you
With our specialist insight into how the Insolvency Service works, we have successfully defended many other directors from being disqualified. Maybe we can help you too.
Give us a call on 020 7467 3980.
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