Thursday, 10 October 2013

Common Mistakes in Director Disqualification Claims - Failing to recognise that the Insolvency Service must adhere to certain time limits

What many directors do not realise is that the Insolvency Service has 2 years from the date of administration/liquidation of the company to commence formal legal proceedings. If they do not they are time barred from bringing a claim without the leave of the court.   Often the Insolvency Service leaves matters late (i.e. shortly before the 2 year deadline) before commencing enquiries of the former directors

However, always remember that the Insolvency Service is obliged to allow individuals sufficient time to respond properly to enquiries. If they have left the matter close to the 2 year deadline and are pressing for a response – this is their fault, not the person they are writing to. That person is entitled to seek sufficient time to respond to what are often comprehensive allegations made against them.

A person should not feel pressured in to giving a quick response due to the Insolvency Service’s slowness in making enquiries. Do not feel pressured in to giving undertakings in return for them not issuing proceedings just because they have left matters close to the 2 year deadline. This is especially true if a person believes he/she has a genuine defence to a claim.  A person is entitled to have sufficient time to respond on such a serious issue.