This legislation received Royal Assent last month with the aim of extending the powers of the Insolvency Service to consider the conduct of directors of dissolved companies.  The scrutiny is very much focused on those individuals who appear to have dissolved their company with a view to avoiding of repaying government backed relief and loans during the pandemic.  Directors who come under scrutiny and are found to be at fault will face disqualification proceedings.  Compensation from them personally can also be pursued where the conduct of directors has led to a loss, or an increased loss, to creditors.

There is now no requirement to restore a company to the register to consider the conduct of directors.  This requirement was a problem in terms of time and cost to deal with restoration.  Now this is removed the Insolvency Service is free to look at all any dissolutions where government loans were not repaid .  At present the government estimates that almost £5 billion in loans will not be recovered due to fraud.

If your company benefitted from government relief and is struggling to repay, or if you have dissolved a company without making that repayment, it is important that you seek early advice to understand your position as a director and what sanctions you could face.

For further information please contact either Kathryn Maclennan kmaclennan@kbl.co.uk, Richard da Roza rdaroza@kbl.co.uk or Alison Horsfield ahorsfield@kbl.co.uk Tel Blackburn 01254 268790, Bolton 01204 527777

Further reading:

Directors disqualification

Misfeasance & directors duties