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In January 2018, Carillion PLC and five associated companies entered into Liquidation. The Insolvency Service has now issued director disqualification proceedings on behalf of the Secretary of State for Business, Energy and Industrial Strategy against eight Carillion directors and former directors of the company. Proceedings were issued in the High Court on 12 January 2021.

A Liquidator will normally make initial requests for information as to the company’s financial position from the directors, who are under a general duty to comply with the request. The Liquidator has the power, if necessary, to apply for an order from the Court requiring a person to provide information about the company or to attend a private examination in Court to answer questions under oath.

Such an order can be made against the following:

  • Any officer of the company;
  • Any personal known or suspected to have in their possession any company property;
  • Any person supposed to be indebted to the company; and
  • Any person whom the Court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company.

What are the implications for the directors in question?

Disqualification can be very serious, as it will also prevent that person from acting as a trustee of a charity, from being on the board of governors for a school or charity and may also prevent that person from continuing to be a part of a professional body, for example, an accountant, doctor or solicitor.

What actions can a Liquidator take?

There are a number of potential actions that can be taken by a Liquidator. These include:

  • Misfeasance;
  • Breach of Fiduciary Duties;
  • Wrongful Trading;
  • Fraudulent Trading;
  • Breaches of the Companies Act 2006;
  • Preferential treatment of creditors;
  • Carrying out transactions at an undervalue; and
  • Recovery of any funds owed by directors to the Company (i.e repayment of overdrawn directors’ loan accounts).

The total losses for Carillion were close to £7 billion and its collapse had an impact on circa 30,000 small businesses in their supply chain. If you wish to discuss any element of this article in further detail or for information on a specific insolvency matter, please contact Adina-Leigh Collins or Bimal Kotecha.