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What happens if I receive a Directors Disqualification ‘Section 16 Letter’?

If, despite seeking advice and following that advice at either an interview or completion of responses to the questionnaire, the Insolvency Service decides that there is sufficient evidence to proceed with a Directors Disqualification claim, then the Insolvency Service (or solicitors instructed by the Insolvency Service) must first send to you – in addition to the general correspondence – a Section 16 Director Disqualification letter.

This letter, the Section 16 Director Disqualification letter, is critical and its purpose is effectively the same as a letter before action in any other legal proceedings. The reason that it is known as a “Section 16 letter” is because the section within the Company Director Disqualification Act 1986 to which it relates is “Section 16”.

The purpose behind the letter is three fold and it will set out the following information in relatively brief detail:

  1. the reasons identified for the potential claim
  2. the grounds of misconduct which have been identified during the investigation which, in the opinion of the Insolvency Service, justify the bringing of the directors disqualification application/claim form.
  3. the letter will also include the period of directors’ disqualification that the Insolvency Service consider to be acceptable – as a result of the grounds identified – and they will make an offer for the director to give a directors disqualification undertaking to the Secretary of State for Business, Energy and Industrial Strategy instead of them having to issue the claim form and to attempt to secure a directors’ disqualification order at the court.

The key point is that if you receive correspondence in respect of Director Disqualification proceedings then that you must try and seek immediate advice from solicitors who have experience in dealing with these matters so that you can receive the most appropriate advice to give the best chance to deal with the proposed directors’ disqualification proceedings.

It is entirely possible, if we are involved earlier enough in the matter, that we can get the Insolvency Service to drop the threatened proceedings all together and, if we cannot do that, then it is very possible that we can manage the process so that you can move forward – within the confines of the proceedings – to achieve the best possible outcome for you.

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