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Restructuring & Insolvency

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What happens if I receive correspondence from the Insolvency Service?

If you were a director of a company that went into liquidation or administration then the failure of the company will be reviewed, by the liquidator or administrator, and a report provided to the Insolvency Service.

If the Insolvency Service decides to pursue you, using the Company Directors Disqualification Act 1986, then it may well commence with you receiving letters from the Insolvency Service in which they will ask questions about the performance of the company, the decisions made and the specific roles of the directors and officers of the company in the period leading up the insolvency of the company through liquidation or administration.

The biggest issue, for you, is that the initial investigations may well seem to be general and unlikely to result in any major issues. However, our experience tells us that the most important point is that taking early advice is essential. This will then allow you to be prepared and respond to their enquiries with the most appropriate details. The importance of this is to not damage your position in respect of the potential director disqualification proceedings that they may be considering.

If advice is not sought, and heeded, then our experienced solicitors have seen examples where a director might divulge something, within an answer – either in writing or at an interview – which can be massively disadvantageous and which can be the difference between the director disqualification proceedings being bought and the Insolvency Service investigation ceasing following that interview or response.

It is worth pointing out, at this stage and another reason why we recommend that you seek advice, is that the initial contact will be a directors disqualification questionnaire or a questionnaire accompanied by a request for the director to attend an interview to discuss the failure of the company.

We have experience of providing specific advice on this matter because, again, a wrong answer – in writing – or an inadvertent phrase being offered in an interview can lead to further investigation which may lead to a director’s disqualification application moving forward.

The key and most sensible approach to take with these documents or interview is that you should only answer the question and do not feel compelled to offer more – do not under any circumstances – feel obliged to offer information not requested.

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