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Directors Personal Liabilities

23/08/2010

Directors Personal Liabilities

The position of company director is one of responsibility. The failure of the wedding gift company, “Wrapit Plc” (Wrapit), is a high profile example of reckless management of a company.

This led to thousands of customers not receiving wedding presents and also led to the two directors of the company being disqualified from acting as company directors for a combined total of 15 years.

Wrapit began trading in 2001 as an internet based wedding gift service. After Wrapit entered administration in August 2008, owing in excess of £7,000,000, Insolvency Service investigators discovered false refunds which enabled Wrapit to continue trading and to continue taking advance payments of at least £872,000 from new customers. By this time the company was already insolvent.

Vicky Bagnall, Director of Company Investigations for The Insolvency Service stated “In this sad case thousands of newly-weds have had their big day spoilt following the wrong-doing of Wrapit’s directors. The undertakings signed by Gelardi and Diamand send a clear message to other company directors; if you run a business in a way that is detrimental to either its customers or its creditors you could be investigated by The Insolvency Service and as a result removed from the business environment.”
Disqualification means that without specific permission of a court, a disqualified person cannot;

  • Act as a director of a company
  • Take part, directly or indirectly, in the promotion, formation or management of a company
  • Be a liquidator or administrator of a company
  • Be a receiver or manager of a company’s property.

Paul Hatton, solicitor at KBL Solicitors comments “The directors in the Wrapit case continued to trade after the company was insolvent. Not only has this led to their disqualification, it also opens up the possibility of creditors of Wrapit, pursuing the directors personally. Directors who suspect their company may be insolvent, need to take urgent advice from their solicitors, accountants and potentially an insolvency practitioner, so as to protect the interests of the company, its shareholders, its creditors and the directors themselves.”