Miscreant directors avoiding bans

Posted: 14th June 2012

insolvent balance sheetInsolvency practitioners R3 have raised concerns that cuts in the funding available to the Insolvency Service (IS) mean that more unscrupulous directors reported to the IS are not being investigated or prosecuted.
When a business becomes insolvent, the insolvency practitioner responsible for its management will prepare a report for the IS where misconduct on the part of the directors is suspected.
The IS is required to investigate these and bring an action to disqualify the director from acting as a director where appropriate.
Fewer than one in three reports currently leads to a disqualification.
Where a third of businesses are said to be regularly using their maximum overdraft facility, the need for caution in extending credit is clear.