THE BOTTOM LINE
- Reduced Payouts for Creditors: Businesses in Northern Ireland awaiting compensation from disqualified directors will now see government administrative fees deducted directly from their recovery payments.
- Cost Recovery, Not a New Penalty: The change does not increase the total amount a disqualified director must pay. Instead, it shifts the cost of distributing the funds from the taxpayer to the creditors who benefit from the recovery.
- Strengthened Enforcement Framework: This move formalises the administrative process for director compensation orders, signalling that the regime is an active and established part of the insolvency and corporate governance landscape in Northern Ireland.
THE DETAILS
A new statutory instrument, The Disqualified Directors Compensation Orders (Fees) Order (Northern Ireland) 2026, introduces a fee structure for services provided by the Department for the Economy. Specifically, the Department will now charge a fee for its role in collecting and distributing funds paid by disqualified directors under compensation orders or undertakings. These orders are a key tool used to hold directors personally liable for losses caused to creditors by their misconduct. This new order ensures that the administrative costs of managing this process are covered.
The fee is calculated based on the time spent by officials managing the distribution, charged at set hourly rates ranging from £20 to £49 depending on seniority, plus any associated expenses. Crucially for businesses, this fee is deducted from the compensation pool before it is paid out to creditors. The total cost of administration will be divided equally among all specified creditors in a particular case, meaning each creditor’s final payout will be reduced by their share of the administrative charge.
For CEOs and their legal counsel, this development serves two purposes. Firstly, it is a stark reminder of the robust director disqualification regime and the potential for personal financial liability for misconduct. The formalisation of a fee system suggests these compensation orders are being actively pursued. Secondly, for businesses operating as creditors, it introduces a new variable into the recovery process. When calculating potential returns from an insolvent company where director misconduct is a factor, legal and financial teams must now account for these administrative fees, understanding that the gross compensation award will not be the net amount received.
SOURCE
Source: The Disqualified Directors Compensation Orders (Fees) Order (Northern Ireland) 2026
