Insolvency Service given new powers

The Insolvency Service has been granted new powers to investigate and disqualify company directors who abuse the company dissolution process under the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act.

Under the terms of the Act, the Insolvency Service, on behalf of the Business Secretary, will be allowed to tackle unfit directors who dissolve companies to avoid paying their liabilities, including Government-backed loans put in place to support businesses during the Coronavirus pandemic.

The Act will also mean the Business Secretary can apply to the court for an order to require a former director of a dissolved company, who has been disqualified, to pay compensation to creditors who have lost out due to their fraudulent behaviour.

The Act extends the Insolvency Service’s ability to investigate directors of companies that enter any form of insolvency, including administration and liquidation, and of live companies where there is evidence of wrongdoing, to also include directors of dissolved companies.

Those found guilty of misconduct following investigation can face sanctions, including being disqualified as a company director for up to 15 years or, in the most serious of cases, prosecution.

For help and advice on related matters, please contact our Insolvency Director and Appointment Taker Richard Warwick today.

Posted in Insolvency.