Irresponsible directors face fines under new UK rules


LONDON • The UK government said it will move forward with plans to punish directors who fail to safeguard their workers from the effects of a company’s bankruptcy.

New powers announced yesterday will be given to the UK Insolvency Service, including the ability to issue fines or even disqualifications to company bosses if they are found to have tried to avoid paying a dissolved company’s debts.

“Some recent large-scale business failures have shown that a minority of directors are recklessly profiting from dissolved companies,” the government’s minister for small business, Kelly Tolhurst, said in a statement. “This can’t continue.”

The plans, proposed in March, follow some high-profile collapses, including Carillion plc in January, which left ministers grappling with how to salvage tens of thousands of jobs and public-private contracts affecting schools, hospitals, roads and military facilities.

In July, London-based Gaucho Group Ltd entered administration, the British version of bankruptcy protection, after the restaurant company said it had struggled with high debt levels and poor performance of some of its burger outlets.

Under the new rules, directors could be disqualified from managing companies for as long as 15 years if their conduct during a corporate insolvency is found to be “unfit”.

Struggling, but “financially viable” companies also will be given more time to turn their businesses around. If they fail, directors may face investigation if they’re perceived to have prioritised the protection of their interests or those of their investors over securing employee salaries or pensions, according to the statement.