Tuesday, 12 November 2013

FAQ - Does agreeing to a director disqualification undertaking open that person up to other potential claims?

The disqualification order or (if a person voluntarily enter into it) undertaking is only there to deal with the disqualification claim. If there are other claims which may be bought against a person in respect of the liquidated company, then the liquidator will need to prove these claims in their own right. A liquidator cannot rely on the fact of a disqualification to try and bring other claims against an individual.

However, it is important to be aware that the disqualification undertaking/order is publicly advertised at Companies House and thus in any other proceedings it can be referred to by way of evidence of misconduct.  It is not unusual for liquidators with claims against directors to wait for the director to be disqualified to further bolster his/her claim against that person.  This may not in proceedings be that effective, but will certain give them the edge in any negotiations with a person. 

There are a wide range of claims which a liquidator may wish to bring against former directors or managers of businesses.