Thursday, 10 October 2013

Common Mistakes in Director Disqualification Claims - Failure to ask for a copy of the draft evidence.

If a director has been served with a “Section 16 Notice” letter indicating an intention to issue proceedings in the absence of giving an undertaking, they should not panic in to giving an undertaking without first understanding the claim against them.
A director is entitled to see a copy the draft affidavit the Insolvency Service will have prepared setting out the basis of the claims and evidence against that person.  In order to issue proceedings, the insolvency Service has to swear a detailed affidavit setting out the various “heads of claim” and the supporting evidence. By the time the Section 16 letter is sent, there should be a draft of that affidavit evidence already prepared. 
A person is entitled to see the draft affidavit, either to help draft a response or to enable that person to seek legal advice.  It is always sensible to do this. The affidavit will set out in far greater detail the allegations against the individual rather than the brief details often given in the section 16 letter. A person can also ask for the supporting documents which go with the draft affidavit evidence and we would always recommend a person does this as well. 
Failure by the Insolvency Service to provide such information can be used against them if they then later issue proceedings without having given a director proper opportunity to consider the evidence and respond accordingly.