10 June 2003

DTI Hotline for shopping dodgy directors

The Insolvency Service of the DTI today (29 May 2003) announced that it was cracking down on disqualified directors and bankrupts who flout regulations and publicised a Hotline number for the public to report anyone they believe anyone is breaching a disqualification order. Consumer and Competition Minister Melanie Johnson said: "I want there to be no hiding place for unscrupulous directors and un-discharged bankrupts who try to cheat the system." For the full press release, go to www.gnn.gov.uk/gnn/national.nsf/TI/. The hotline number is 0845 6013456. Cicely Brown, Director for Corporate and External Affairs at the BPIF says: "We're pleased to support the government’s efforts towards enforcing the existing legislation by making it as easy as possible for individuals to give evidence where wrongdoing is suspected. Anything that can be done to encourage the reporting of unscrupulous directors or their professional advisors is a step in the right direction to stamp out contrived insolvencies. We will be distributing a leaflet promoting the Hotline in the July copy of our member newsletter and continue to work with ICSM to raise awareness in the industry." Andy Allies, Debt Recovery Manager with ICSM encourages the industry to use the service although he suggests that more is needed: "The new emphasis appears to centre on defaults in respect of restricted persons acting as directors or shadow directors and we believe that there is another area that should be targeted and that is disqualified directors who subsequently are made bankrupt and bankrupts who continue to trade on credit and run up debts. "The disqualified director who runs a business as a proprietor, partner or sole trader is not breaking the law. However, if he/she compounds the incompetence which caused him/her to be disqualified in the first place, should he/she not be subject to further restriction? He continues: "A person who has been made bankrupt whilst running a business can also be given credit, provided that the supplier is informed at the time that the person concerned is a bankrupt. There are minor restrictions, including a ban on trading in a different name, but essentially the regulation limiting the amount of credit taken does not apply to trade accounts for a bankrupt trading on his/her own account. Suppliers are still vulnerable. "We have an example in the former instance, where a disqualified director was subsequently made bankrupt for £750,000. We submit he should be subject to further restriction such as an extension of his disqualification period," suggests Mr Allies. However ICSM also has confidence that another serial bankrupt who concealed his situation and incurred more, substantial debts, will soon be charged, possibly with criminal offences. "The message is Supplier – Beware! Not only should you examine the trading history of new customers but if you are in any way suspicious it would do not harm to also consult the register of disqualified directors at http://ws2.companieshouse.gov.uk/ddir/index.shtml," concludes Cicely Brown.