31 Oct 2014 01:16pm

"Credit crunch" leads to rise in director disqualifications

The number of director disqualifications has increased by 46% since last year, with the number of disqualifications in the financial and insurance services industry six times higher than the same period in 2013-14

Figures published yesterday by Zolfo Cooper, the advisory and restructuring firm show that director qualifications have increased by 11% in Q2 – from July to September 2014 for the insolvency service – rising from 237 in Q1 to 264. The number has risen by 46% since Q2 2013-14.

The financial and insurance service sectors have seen a large increase in company failures through director disqualifications, Zolfo Cooper said, rising from just one in 2013-15 to six in 2014-15.

HMRC has lost out most significantly from the failings, with losses of £39.4m, compared to £7.5m owed to trade creditors and £8.3m to investors.

Zolfo Cooper said that many of the disqualifications were a “backwash” from the wrong-doing of the financial crisis.

“Approximately half of the director disqualification orders made this quarter were the result of directors trading through the bad times to the detriment of their company’s creditors,” it said.

“If we see more of this type of disqualification throughout the remainder of the year they will contribute to a rise in disqualifications.

“Vince Cable’s plans for tougher measures when assessing the conduct of reckless directors may also come into force (in particular taking into account directors’ past misdemeanours and business failures). This should also lead to further increases in director disqualifications.”

Ellie Clayton




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