Insolvency Service Investigations

Insolvency Service Investigation Solicitors

What is the Insolvency Service?

The Insolvency Service is a government agency that, in their words, “helps to deliver economic confidence by supporting those in financial distress, tackling financial wrongdoing and maximising returns to creditors”.

“The Insolvency Service have powers to investigate both into the affairs of trading companies and companies that have entered into insolvency proceedings and their directors.

The Insolvency Service carry out these investigations on behalf of the Secretary of State.

Investigations into Director Conduct

Following a company entering into a formal insolvency situation, the office-holder carrying out that insolvency procedure may pass on information to the Insolvency Service relating to the conduct of a director.

The Insolvency Service will examine the events leading up to the insolvency to see if there was any misconduct on the part of the directors.

They have the power to:

• Require the production of documentation
• Gain entry to premises and to search and seize items
• Require disclosure of documents

This includes where the director has conducted the company:

• With the intent to defraud creditors or the creditors of any person
• For a fraudulent or unlawful purpose
• In a manner which is unfairly prejudicial to some part of its members or where any actual or proposed act or omission of the company is or would be so prejudicial
• Where persons concerned with the company’s formation or management have been guilty of fraud, misfeasance or other misconduct towards members
• Where company members have not been given all the information which they might reasonably expect

What are the possible consequences?

The Insolvency Service may apply to the court to have the company wound up and / or for one of more directors to be disqualified under Company Directors Disqualification Act 1986.

If the Insolvency Service’s investigations reveal that criminal offences may have been committed in the conduct of the company, the case might be referred to their Criminal Investigation Team or the police