This is the next article in a series by the Directors Friend.
The Insolvency Service (‘IS’) confirmed in a recent press release that David Parker (‘Mr Parker’) (the UB40 business manager) and Earl Acton Falconer (‘Mr Falconer’) (the UB40 bass player) gave director disqualification undertakings to the IS with the periods of disqualification being 11 years and 4 years respectively.
Mr Parker is stated to have accepted that he breached his fiduciary duties as a director of the Reflex Recordings Limited (the ‘Company’) by:
“… deliberately and knowingly causing the dissipation of £252,980 of Company assets between 9 December 2013 and 18 December 2013, without making due provision for subrogated rights and/or claims of at least two creditors.”
At the time, the Company was insolvent and Mr Parker knew about the subrogated rights and / or claims of the creditors against the Company.
Mr Falconer and separately a Mr Storrod (also connected with the band) also accepted that they were in breach of their fiduciary duties as directors of the Company by abrogating their duties resulting in or allowing the dissipation of the monies.
The Company’s assets consisted of the music catalogues of UB40 and the trade of the Company included receiving royalties in connection with the catalogues.
Susan MacLeod, Chief Investigator at the IS said:
‘In investigating insolvent companies, the Insolvency Service always looks very closely at individuals who demonstrate a disregard for creditors and appropriate action is taken where wrongdoing is uncovered.’
THE DIRECTORS FRIEND COMMENTS:
These director disqualifications go to show that you should be aware of your duties as company directors and that especially when a company is insolvent a director should carefully consider the interests of creditors and not dissipate the company’s assets. Appropriate legal should be sought to protect yourself from being disqualified from being a company director.
OTHER CLAIM RISKS FOR DIRECTORS:
If the conduct complained of had been dated from 01 October 2015 onwards then the well-advised director should seek and obtain legal advice upon their risk of the IS bringing Compensation proceedings against them personally for the benefit of creditors of the company in addition to director disqualification.
In addition, the Joint Administrators of the Company may also consider bringing proceedings to recover the dissipated funds from the directors personally. This claim could be brought as Misfeasance. This is where the director is alleged to have
‘… misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company.’
Food for thought indeed! As your Directors Friend, it can be seen that when you are first written to by the IS, an Administrator or a Liquidator that you should take immediate legal advice to protect your position to respond to such claims.
WHAT TO DO NOW:
My name is Richard Cole. I am a Solicitor who formerly worked at the IS carrying out director disqualification investigations. I am now the Directors Friend. Why not contact me to discuss on: +44(0) 1992 558411. The earlier that you speak with me the more that I can help.
Until the next time…
THE DIRECTORS FRIEND