Once a Winding Up Order or Bankruptcy Order is made by the court the companies and individuals affairs are handed over to a civil servant known as “The Official Receiver”. The job of the “OR” is two-fold:
- To liquidate (turn into cash) and deal with any assets or value owned by the limited company or individual for the benefit of the unsecured creditors.
- To investigate the conduct of directors and the performance of their duties with reference to the 1986 Insolvency Act and Enterprise Act of 2002 and take action with regard to Directors Disqualification Orders and Proceedings
After a Company has been compulsorily wound up all directors are called to an interview by the official receiver, and will be sent a questionnaire that requires completing on the affairs of the company and the circumstances of the insolvency. The most important thing is to complete the questionnaire honestly and on time. Short but accurate answers are best
A failure to return the questionnaire is a “failure to cooperate” and grounds for a Directors Disqualification Order so please ensure you return it by the deadline, most directors are not subject to a disqualification order solely on their past actions but for a failure to comply with the directions of the Official Receiver.
The questionnaire will be the basis of a follow up formal interview with the Official Receiver, and depending on individual circumstances the interview can last up to five hours ! and they don’t offer you tea!
The purpose of the meeting is to investigate the assets and liabilities of the company and the reasons behind the failure, they will ask you to bring all bank statements and company records to be handed over for further investigation.
Specifically, they will be looking for evidence that the Directors:
• Preferred or paid other suppliers at the expense of HMRC.
• Preferred themselves or connected parties over other creditors including HMRC
• Paid down bank debt or finance to protect themselves from a potential Personal Guarantee liability
• Have an outstanding overdrawn directors loan account
• Determine when the insolvency occurred and if the directors are guilty of wrongful trading
• Theft, Fraud, and the sale of assets undervalue to a third party but specifically to themselves, for example, a new company under their control
Most directors may have innocently made some mistakes and on the whole, the Insolvency Service is not trying to punish directors who have acted in good faith.
If you are asked a question and really do not have the answer then do not guess or try and be helpful by making reasonable assumptions about what the answer probably is for example if you do not know what date an event occurred then say “ I am sorry I do not know the answer but I will formally respond within 7 days”. If you provide an answer which is wrong it can be used against you at a later stage, yes you need to cooperate but better to ensure the responses are accurate and not best guesses.
We would recommend being honest and transparent with the OR, however, clearly, some directors conduct may put them at risk of a Directors Disqualification Order (DDO)and or a Money Claim. This can be very stressful and costly to defend, so if you feel you are at risk then it is important to give us a call today to discuss in confidence your conduct and how we can best defend your position.
Remember even if you re subject to a Directors Disqualification Order (DDO) we can make an application both for an interim order and a full order of the court to grant you permission to still be a director (even when your technically banned).
If you want someone to accompany you to the interview or just want some advice then call us on 0800 0385 140 for advice.
Whatever your circumstances are 4R Business Recovery can and will be able to help you. Simply get in touch with an expert today on 0800 902 0123 to get free advice that will help you cancel out the stress of dealing with any issues you may be facing.