When a company is to be liquidated, it is understandably a stressful and trying time for everyone involved. While a great deal of sympathy should go to people throughout the company at all levels, because losing your job is never easy but it can be particularly rough in the current economic climate, there should be attention placed on the directors and management of the companies.
For some people, there isn’t a lot of sympathy for people higher up the food chain when a company goes bust, and this is easy to see why. These are the people who should have earned more money and they are also more likely to find another job after a company has been dissolved. These are two massive advantages that the people at the top of the ladder have over those at the bottom of the ladder, but this sort of situation is difficult for everyone involved with a company.
Directors don’t always carry out their expected duties
However, there will be times when directors and management don’t carry out their duties, which mean that they have a hand in the demise of a company. This is where there is genuine anger and hurt directed at these people, and again, it is easy to sympathise with the people who have been wronged by the actions of those above them in the chain of command in a business. If a workforce has been placed at risk due to bad management decisions or improper actions, it is only right that people feel aggrieved and aggravated at the work that has been undertaken by those above them.
There are also plenty of ways in which directors can bring shame on themselves when a company is in administration or is being liquidated. Directors have a duty and responsibility for their firm and this includes assisting the liquidator if they become involved with a company. One of the most serious crimes that a director can do at this point is hide assets, or fail to disclose assets to a liquidator, and one former director in Wales suffered due to their actions.
Mr McKenzie was a director of Blavina Manufacturing Limited and the company was placed into a CVL, Creditors Voluntary Liquidation. After investigation, Mr McKenzie admitted that he failed to disclose over £600,000 worth of assets and he also failed to disclose a debt of around £1.4m. This was owned by a company that was associated with the firm. The firm was also found to have obtained credit of £97,000 while insolvent and they also breached agreements that had been put in place with respect to disposing of assets. This amounted to another £93,000 worth of assets, so you can see how the sums involved rose rather quickly. These are all things that directors need to be aware of, and you cannot claim ignorance of your responsibilities when acting in this manner.
A spokesperson for the UK Insolvency Service released a statement, saying; “Directors who fail in their obligations and cause creditors and the public to lose money can expect to be investigated by the Insolvency Service and enforcement action taken to remove them from the market place.”
In the end, McKenzie was disqualified for 6 years under the disqualification of directors act and some observers believed that this ban was shorter than what it could have been. This is because the actions that McKenzie undertook were of a serious nature, and had a big impact on what the liquidator was able to do. While many directors may feel annoyed or aggrieved at the demise of their company, there is call for them to act in such a manner, and this is why the director disqualification rules are in place. Perhaps disgraced directors believe that they won’t get caught, but hiding or failing to disclose assets are extremely serious actions, which is why the punishments involved with these actions are quite serious.
Specialist solicitors who have dealt with this style of case in the past are the experts to turn to if you are facing this sort of situation. Once action like this has been undertaken, there is a need to get the best level of support and guidance that you can. Expert advice will provide you with the best defence of your actions, and can help you to minimise the impact of any possible disqualification period.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.