Compensation Order Against A Director For Negligent Conduct

In this article, we consider the recent case of Secretary of State for Business and Trade v Barnsby (Re Pure Zanzibar Ltd) [2023] EWHC 2284 (Ch), in which a compensation order was made against the sole director of Pure Zanzibar Limited, Mr Barnsby.

The Law

Section 15A of the Company Directors Disqualification Act 1986 states that a director who has been disqualified, either by court order or by offering a voluntary undertaking, can be held liable for all losses attributed to their misconduct by way of a compensation order.

The case of Pure Zanzibar Limited is only the second case concerning compensation orders since they were introduced in 2015, and, usefully, it provides clarity that they can be a tool used by the Insolvency Service in cases of negligent conduct by a director.