The Insolvency Service has recently published a rather extreme example of a director’s failed attempt to circumvent disqualification[1].

Bradley Trevor Silver was sole director of 24/7 London (GRP) Ltd, which purported to be a television production company. Accounts were filed claiming a turnover of £4.7 billion and assets of £2.4 billion. The company also produced documents and invoices claiming work had been undertaken on high profile television shows. On the back of this, the company made various attempts to obtain credit from a number of financial institutions.

The problem was, it was all a sham. The accounts and documentation were fabricated and forged, and not particularly well. The Insolvency Service stepped in and 24/7 London was wound up in the public interest.

Unsurprisingly, the Insolvency Service took a dim view of the actions of Mr Silver and brought disqualification proceedings against him for dishonest attempts to obtain credit made through 24/7 London.

Immediately prior to the disqualification hearing, the Insolvency Service reports that its lawyers were contacted by a Mr Solomans. Mr Solomans stated he was a friend of Mr Silver and that Mr Silver had very sadly died in a car crash.

Oddly, Mr Solomans had the exact same telephone number as Mr Silver. It also transpired that cheques paid into 24/7 London’s bank account with Mr Soloman’s name and signature on had bounced. Mr Solomans then stopped responding to emails.

At the hearing, Registrar Derrett concluded that Mr Silver had not died after all and, in all probability, Mr Silver and Mr Solomans were one and the same person. She disqualified Mr Silver from acting as a director for 14 years and ordered that he pay the Secretary of State’s costs.

As Cheryl Lambert, chief investigator at the Insolvency Service, commented: “This is one of the more bizarre cases of dishonesty and misuse of limited liability I have ever come across.”

Compare this with another recent case[2], where a car transporter company went into administration in October 2009 following a winding up petition presented by HMRC. After the company moved into creditors’ voluntary liquidation, the liquidators brought a claim against the directors for wrongful trading[3].

The question for the Court was whether the directors had known, or should have known, that the company had no reasonable prospect of avoiding insolvent liquidation and should therefore have ceased trading earlier.

On the facts, the Court was satisfied that the directors had at all times implemented well thought-out strategies designed to keep the company trading and were doing their best to take account of prevailing economic conditions. This was supported by good evidence, including detailed correspondence with HMRC and exemplary management accounts. Accordingly, the wrongful trading claim was unsuccessful.

These are two polar examples of how directors’ actions in the period prior to an insolvency can affect their subsequent liabilities – and clearly, Mr Silver’s is not the example to follow.