A company director has been ordered to carry out 120 hours of unpaid work as part of a 12 month community order and disqualified from acting as a director for ten years for running a phoenixed company whilst serving a seven-year disqualification undertaking. 

In proceedings brought by the Insolvency Service, the Defendant pleaded guilty to one count of acting as a director whilst disqualified, one count of being/acting as a director of a company known by a prohibited name, and one count of failing to ensure that company accounting records were preserved. He was sentenced before Manchester Crown Court on 21 July 2021.

In this particular case, prior to the liquidation of the company, a new company was set up with the Defendant's wife listed as director. The new company, trading under a very similar name, picked up where the liquidated company left off, with invoices showing they had retained the same clients and trade. 

Restrictions are in place to provide transparency to creditors and protect them from dealing with a company using a prohibited name without the knowledge that this is a new entity and the old company has entered liquidation.

The case is a reminder that a failure to co-operate with an Insolvency Service investigation, a disregard for the terms of a disqualification undertaking and a failure to take duties and responsibilities as a director seriously, can result in a criminal investigation and ultimately, could lead to a criminal conviction. 

It also highlights the important of directors seeking early advice to avoid criminal and/or civil sanctions.