Bankrupt director and non-exec

F

fred_bloggs

Nasty problem here: I am / was the only exec director of each of a group of companies (each SMEs). Ive just been declared bankrupt. The other director of each of the group members is a non-exec and has been involved in general advisory work but not the day-to-day running and in particular has no intimate knowledge of some of the operating systems for statutory record keeping for example.

I must step down (CDDA s.11(1)) but he is neither inclined nor wants to step up and has filed his resignation anyway. None of the group members have been trading but two have assets which are up for disposal.

For the purposes of these questions I am putting aside the possibility of me seeking leave from the Court to act.

So here goes:

(1) As I must stand down (and must have assumed that Ive stood down at the moment the bankruptsy order was made) can the non-exec actually resign or is he statute-blocked?

(2) if he manages to get a 288(2) in first, how does that stand when I file my 288(2)..... (oops)

(3) we use on-line filing at companies house (I am also co secretary) - so does using the online service by me to file my 288(2) constitute "acting on behalf of the company" (and thus a violation of CDDA s.11(1) if it is done without a board resolution?

Finally:

(4) If I am intending to make application for leave to act, is that a good reason to not file a 288(2) in the meantime and avoid doing anything "director-like" (noting that "acting as - ie actually doing things" and "being" are two distinct things)?

... and I post these questions here becuase we have no money to ask a lawyer.... :(

... and Im due to ask these of the OR but I havent got to him yet and its stressing out the non-exec.

Thanks everyone.
 

thevaliant

Free Member
Dec 9, 2008
120
33
So here goes:

(1) As I must stand down (and must have assumed that Ive stood down at the moment the bankruptsy order was made) can the non-exec actually resign or is he statute-blocked?

(2) if he manages to get a 288(2) in first, how does that stand when I file my 288(2)..... (oops)

(3) we use on-line filing at companies house (I am also co secretary) - so does using the online service by me to file my 288(2) constitute "acting on behalf of the company" (and thus a violation of CDDA s.11(1) if it is done without a board resolution?

Finally:

(4) If I am intending to make application for leave to act, is that a good reason to not file a 288(2) in the meantime and avoid doing anything "director-like" (noting that "acting as - ie actually doing things" and "being" are two distinct things)?

... and I post these questions here becuase we have no money to ask a lawyer.... :(

... and Im due to ask these of the OR but I havent got to him yet and its stressing out the non-exec.

Thanks everyone.

Very nice to see someone acting properly, rather than just ignoring all these issues like I have seen in the past.

Answers (I am not a lawyer):

1. I don't believe you can stop someone resigning as a director if they really want. If that leaves no directors to run the company, that creates a lot of problems. Is there no one else who could step up to the bat?

2. The company would be left with no directors (though still a Company Secretary fortunately). I think the technical answer is an EGM must be called and a new board appointed by the shareholders at that meeting. Could be hard if it is just you and him.

I think Companies House will (once they notice no directors) start striking off procedures, though in practice this could take months and likely will be challenged by the Revenue if there is any tax to pay.

I wouldn't worry about Companies House at the moment. They will take a bit of time to wake up to the lack of directors. You probably have a few months yet.

3. I don't know. But I will say this. You cannot stop someone resigning and if required to resign as part of your bankruptcy, you must do this.
Technical point - Companies House is merely a record centre. What is listed there is NOT the legal position of a company. It is the statutory books that are the legal position. Companies House need to be informed, and if not by you, then who?

4. I do not know.

Good luck and well done for playing things straight.
 
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M

mahutchinson

It could be argued that as an executive director you are leaving the company more in the lurch than the non-exec, who does not have day to day duties running the company and complying with statute in the same way as you do (his job is to oversee the execs and ensure that they are doing their jobs properly). In reality no-one can prevent anyone resigning if they wish to. Don't forget that filing forms at Companies House is an administrative issue and technically the legal position is obtained from the information in the register of directors. Of course, if there are no officers left the registers are unlikely to be updated correctly !
 
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