Millions of air travellers take comfort from the well-known 'ATOL protected' logo. The High Court took firm steps against a director of a travel agency to ensure that the public confidence is not misplaced.
The travel agency's business suffered a sudden downturn due to the Brexit vote and an outbreak of the Ebola virus in Africa. For some time after its Air Travel Organisers' Licence (ATOL) expired, it continued to take new bookings. Booking forms issued to four clients continued to bear the ATOL logo wrongly. Other clients, who had paid deposits, received neither a holiday nor a refund.
When the agency entered creditors' voluntary liquidation, it was estimated to owe creditors over £500,000, including more than £80,000 to the clients. In those circumstances, the Secretary of State for Business, Energy and Industrial Strategy commenced proceedings against the agency's sole director and majority shareholder under the Company Directors Disqualification Act 1986.
Ruling on the matter, the Court found that the director had acted neither dishonestly nor with a view to personal gain. He believed that issues concerning the renewal of the agency's ATOL would be swiftly resolved. He and members of his family had lost personal funds they had invested in the business and he was at all times motivated by a desire to keep the agency afloat.
However, the Court found that, as sole director of a company that was operating in a highly regulated framework, he was woefully reckless and incompetent. Clients' money had been placed at significant risk and consumers might have suffered further loss had the agency not ceased trading.
By his conduct, he risked undermining public trust in the ATOL scheme and exposed the agency to a threat of criminal sanction. He caused clients to be misled into believing that they had ATOL protection and exposed them to significant risk of substantial financial loss. Upholding the Secretary of State's application, the Court disqualified him from acting as a company director for seven years.
For advice in respect of Directors Disqualification Proceedings please contact Leanne Schneider-Rose l.schneider-rose@sydneymitchell.co.uk on 0121 698 2211.
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