R3 comments; Wrapit Director Disqualification
Steven Law, President of R3, the insolvency trade body comments on the disqualification of the directors of Wrapit.
“We welcome the announcement that the two directors of Wrapit have been disqualified for a total of 15 years by the Insolvency Service – they caused untold misery to engaged couples expecting gifts for their big day. When the system works well, as in cases like this, it sends out a clear signal that company directors cannot act wrongfully without fear of repercussion, and also this action saves future losses to creditors and consumers.
“However, there are likely to be many more Directors out there simply getting away with it as the number of cases of suspected misconduct by company directors has nearly doubled in recent times. Insolvency practitioners sent in over 7,000 reports (7,030) for 2009-10 compared to 4,752 in 2008-9. During 2009-10, The Service secured 1,388 disqualification orders or undertakings against directors of failed companies, compared to 1,281 in 2008-09. In fact the Insolvency Service has only taken forward 19% of reports, compared to 26% in 2008-9 and 45% back in 2002-3.
“The Insolvency Service has announced that they have to cut their running costs by 11% which is an unavoidable necessity in this climate, but I am concerned it will lead to a reduction in the number of insolvency and live company investigations they are able to pursue. Reductions in resource for company investigations is the equivalent of taking police off the beat.
“It is a matter of public interest that the Insolvency Service has the resources to appropriately deal with all the cases they receive – the key areas of investigations and enforcement should be ring fenced and the cuts imposed elsewhere within the Service.”