A letter from the Insolvency Service
If you were a director of a company and the company then went into an insolvency procedure – liquidation or administration – then the reasons behind the failure of the company will be reviewed, by the appointed liquidator or administrator, and they will then submit that report to the Insolvency Service. If the Insolvency Service decides having reviewed the liquidator or administrator’s report to pursue you, under the power of the Company Directors Disqualification Act 1986, then it will usually start by sending you letters.
What do I do when I get a letter or a questionnaire from the Insolvency Service?
The letters, usually accompany a questionnaire, will ask questions about your understanding of the performance of the company, the role that you undertook, the financials of the company, the decisions which were made and the involvement of any other director or officers in the timeframe leading to the failure and, ultimate, insolvency of the company.
The most important point to take is that whilst these letters and documents may seem reasonably vague and non-specific and you may feel that your answering them are unlikely to result in any major issues – the experience we have tells us that the responses you give are extremely important and can have a significant impact on the process moving forward. It is essential, if you receive these letters or documents, that you take advice as early as possible. If you do take advice, then you should be in a position where you can provide a response with the details required by the document.
The importance of the responses you provide is to ensure that you do not provide information in a way that may end up damaging your position in respect of any potential director disqualification proceedings that the investigation maybe working towards.
If advice is not sought, or is sought but not taken on board, then our team have seen cases where it is possible for a director to include information, within their responses to the questionnaire which can become a problem for them and which can, in worse case scenarios, be the difference between the Insolvency Service commencing the disqualification proceedings or choosing to stop following the interview or response to the questionnaire.
We recommend, strongly, that you seek advice because the initial contact will usually be in the form of a directors’ disqualification questionnaire – sent with a letter for you to fill in at home or, in the alternative, a questionnaire which will be accompanied by a letter that asks you to attend an interview at the Insolvency Service.
The advice that we provide, in respect of the most sensible responses to either the questionnaire or the interview, is that a “less is more approach” is the key. We would always advise that you should only answer the question and not feel that you need to offer more than that.
How our Restructuring & Insolvency team can help you
If you are a director and have concerns about your duties or are facing an investigation, it is crucial to seek legal advice immediately. Please contact Richard Ludlow on 01732 496493 or by the enquiry form on this page.