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23rd January, 2019
In the recent directors disqualification case of Secretary of State for Business Energy and Industrial Strategy v Rajinder Singh Bains [unreported], the defendant raised a preliminary issue on the new three year limitation period introduced on 1 October 2015. Mark Baldwin, of our Insolvency Service team, reviews the decision.
The Small Business Enterprise and Employment Act 2015 brought a number of changes to the directors disqualification regime and in particular extended the period within which the Secretary of State may bring proceedings against unfit directors of insolvent companies from 2 years to 3 years from the date of insolvency. The Act also slightly redefined the matters to be taken into account by the Court and the Secretary of State. These changes came into effect on 1 October 2015.
In this case the company had gone into liquidation on 26 January 2016, and the Secretary of State issued proceedings in February 2018, alleging misconduct between 24 July 2014 and 26 January 2016.
The defendant argued that as the Secretary of State had elected to issue proceedings utilising the new limitation date afforded by the 2015 Act he could only rely on conduct that had occurred after 1 October 2015 and had he wished to rely on conduct prior to 1 October 2015 he should have issued within 2 years under the old limitation regime.
His Honour Judge McCahill Q.C. disagreed. He held that the new limitation period was free standing and the Secretary of State could rely on conduct predating 1 October 2015 if he issued within 3 years of insolvency.
This was a novel application by the defendant and a welcome clarification for the Secretary of State and prospective defendants.
© Howes Percival LLP