Director Disqualification:
Compensation Orders
As part of any director disqualification proceedings, the Insolvency Service may also seek compensation from that director.
If this is a compensatory matter, the usual course now is for the Claim Form served on you to set out two claims:
- That the Defendant (in this case you as the director) be disqualified from taking part in the promotion, formation or management of a company for X years; and
- That the Defendant pay the sum of £X in compensation for certain actions that were taken in the lead up to the insolvency of the company.
This clearly brings a new tension to disqualification proceedings being brought against a director. In certain cases, it is conceivable that a director may be content to pay the compensation, but not be disqualified, or in fact vice versa. In our experience most directors will be fighting the disqualification most strongly because it will have the largest impact on their ability to do business.
We can assist you with negotiating the above and either defending the allegations or coming to a settlement with the Insolvency Service were appropriate. The claim might be presented to you as straight-forward by the Insolvency Service, but this is often not the case and there is an evidential burden that the Secretary of State must satisfy in order to disqualify you and/or seek compensation from you.
Section 15A – C of the Company Directors Disqualification Act 1986:
https://www.legislation.gov.uk/ukpga/1986/46/crossheading/compensation-orders-and-undertakings
