July 20, 2019

July 19, 2019

Subscribe to Latest Legal News and Analysis

July 18, 2019

Subscribe to Latest Legal News and Analysis

July 17, 2019

Subscribe to Latest Legal News and Analysis

UK Insolvency Regulators’ Bite Now as Bad as Bark

The director at the heart of the Carrington Wire pension fund deficit saga has been disqualified for a period of 12 years.


We have previously reported on the background to the Carrington Wire Limited (“CWL”) collapse and the Pensions Regulator’s actions in issuing warning notices to CWL’s former Russian parent company (OAO Severstal), and a contribution notice to Richard Williams, the sole director and shareholder of Gillico Limited (“Gillico”) (a shelf company that purchased the entire CWL shareholding for £1). 

You will be aware from our previous post (Dodgy Directors Top Trumps) that the UK Insolvency Service will investigate directors’ conduct and if appropriate commence director disqualification proceedings or enter into disqualification undertakings. Accordingly, the Insolvency Service has also carried out an investigation in relation to the collapse of CWL and the conduct of Richard Williams as a director.

Case against Mr Williams

Mr Williams was at the heart of a series of transactions which enabled OAO Severstal to avoid its liabilities under a guarantee to the CWL Defined Benefit Pension Scheme (“Scheme”).

The pension deficit in relation to the Scheme was £26.5 million. While OAO Severstal had attempted to sell CWL, and the Scheme and its Trustees were initially kept appraised of such efforts, once it was clear no third party was willing to purchase CWL and provide a similar guarantee to the Scheme, OAO Severstal continued to seek an exit from CWL and its guarantee without the Trustees’ knowledge.

Mr Williams was the sole director and shareholder of Gillico and, in 2010, Gillico purchased the entire share capital of CWL. As Gillico was not associated with OAO Severstal, this meant that the guarantee provided by OAO Severstal to the Scheme fell away on completion of the share sale. On the same date as completion, Mr Williams became a director of CWL – at a time when he knew that CWL would not be able to settle the Scheme deficiency.

Not only this, but as part of the share sale an apparent ‘working capital adjustment’ of £400,000 was to be provided by OAO Severstal to Gillico as purchaser of CWL. This money never materialised into CWL but instead was transferred (net of costs) to Mr Williams. Mr Williams personally benefited to the tune of £382,136. By his own admission, the money was used to repay personal debts and make payment to his wife, from whom he was then separated.

As a result of the series of transactions, on liquidation of CWL its liabilities to the Scheme were £26.5 million with a total deficiency of £44.9 million (including £17.5 million due to shareholders).

Disqualification undertaking

Having previously been slapped with a contribution notice in April 2015 for the £382,136 misappropriated, Mr Williams also suffered an investigation by The Insolvency Service.

Mr Williams’ actions were such that he misused his position as a director to:

  • withhold information from relevant parties;

  • provide untruthful assertions, promises and statements that assuaged and coerced others;

  • knowingly ignore the Pension Regulator’s advice/instruction in relation to security of Pension funds on sale/transfer; and

  • corruptly accept or divert payment for his part in the transactions.

On 2 November 2015 The Secretary of State for Business, Innovation & Skills accepted an Undertaking from Mr Williams for 12 years from 23 November. Such undertaking means that Mr Williams will not be able to: (1) act as a director; (2) take part, directly or indirectly, in the promotion, formation or management of a company or LLP, or (3) be a receiver of a company’s property.

The Insolvency Services has noted that:

“This was a disgraceful conspiracy to abandon a pension scheme and this disqualification shows that misuse of the privileges of limited liability trading are not tolerated and the Secretary of State will seek out miscreants to send a message to those tempted to use companies as a vehicle for evading debt, especially the pensions of hard working citizens.”


It can be seen in the case of Carrington Wire that the Pensions Regulator and the Insolvency Service have certainly not been averse to utilising their regulatory enforcement powers. It should sound a warning to all directors and others involved in such distressed situations to consider the serious implications of any wrongdoing and the fact that the regulators have teeth and are not afraid to use them to protect the innocent.

© Copyright 2019 Squire Patton Boggs (US) LLP


About this Author

Susan Kelly, Squire Patton Boggs, Restructuring Lawyer, Insolvency Attorney

Susan leads the Restructuring & Insolvency practice group in the UK and Europe and is based in our Manchester office.

She worked in London for the first half of her career and although now based in Manchester she spends time in London, Europe and further afield in her capacity as co-chair of the Cross Border Restructuring group.

Susan's expertise covers a broad range of domestic and international insolvency (both contentious and non-contentious), lender security reviews and enhancement, restructuring, turnaround and...

44 161 830 5006
Siân E. Taylor, Squire Patton Boggs, Manchester Lawyer, Bankruptcy"

Siân is an associate in the Restructuring & Insolvency team based in our Manchester office. Her particular expertise encompasses a range of non-contentious and some contentious insolvency work, lender security reviews and enhancement, and business support.

Siân has worked on a wide variety of transactions advising administrators, LPA receivers, lenders and creditors of insolvency companies, primarily focused upon corporate insolvency regimes. Clients include top tier accountants, financiers, agents and corporations and she has experience of advising clients on their options as creditors, debtors and office holders.

Siân is actively involved in the team’s ongoing marketing strategy.

44 161 830 5095