There has been a sharp increase in director disqualifications, which have risen 46% in the three months to September compared to the same period last year driven by the fall-out from the financial crisis, according to analysis by insolvency experts Zolfo Cooper
From July to September 2014 the number of directors disqualified increased 11% compared to the previous quarter (264 from 237), with 5.4 years being the average period of disqualification.
The firm’s Disqualification Tracker, which analyses trends in director disqualifications and associated company failures, shows the highest disqualifications since the start of the analysis.
Comparing the first six months of this financial year 2014/15 to the previous six months, the number of director disqualifications has increased 33% from 377 to 501.
The financial and insurance sector saw the largest increase in company failures due to director disqualifications, with double the number of failures this quarter. Compared with last year, director disqualifications in this sector have increased six-fold. Property and construction also recorded a 55% increase.
Paul Huck, director at Zolfo Cooper, said: ‘This quarter, approximately half of the director disqualification orders were due to wrong doing during the credit crunch of 2008 -2010. With the likelihood of tougher measures being introduced when assessing conduct and when taking into consideration past misdemeanours, we could see further increases going forward.’
The majority of the disqualification orders (64%) were in relation to ‘serious unfit conduct’, with directors facing disqualifications of between two and five years. The number of companies which failed due to director disqualifications increased by 14% (from 203 last quarter to 231). Compared to the same quarter last year, company failures are up 57%.
Losses to known creditors fell during the quarter, down from £119.6m to £68m. HMRC continued to have the largest losses at £39.4m, with £7.5m owed to trade creditors and £8.3m to investors.
