THE number of directors of insolvent companies facing disqualification proceedings for involvement in criminal activity has increased by 52 per cent in a year, new figures show.
City law firm Wedlake Bell, which obtained the figures, has warned this is just the tip of the iceberg.
In the year up to 31 March 2010, 265 directors of insolvent companies faced disqualification proceedings, compared to 174 the year before. This is despite a decrease of 17.8 per cent in the number of company liquidations over the same period.
Edward Starling, partner and head of the rescue and restructuring team at the law firm, commented: “This is a considerable jump in proceedings being brought against unfit directors of insolvent companies.”
The Department for Business, Innovation and Skills (BIS) – which launch the proceedings – is said by Wedlake Bell to be underresourced, however. Starling believes not all directors believed to have engaged in criminal activity are being investigated.
Starling said insolvency practitioners suggest that “for every one of these cases there are probably 10 other instances of suspect activity that are not pursued.”