Official Receiver v Obaigbena

The Official Receiver sought a disqualification order under section 6 of the Company Directors Disqualification Act 1986. The court held that the defendant, as sole director of Arise Networks Ltd, caused the company to continue trading from 31 December 2014 despite an absence of reasonable prospect that creditors would be paid or that the company could avoid insolvent liquidation. The company was pre-revenue, wholly dependent on loans from associated companies in Nigeria, and was subject to Nigerian foreign exchange restrictions from September 2014 which curtailed funding. The judge found the charge established on the facts (arrears, creditor correspondence and rising liabilities) and that the conduct met the statutory concept of unfitness.

The court applied established principles on unfitness (including Re Sevenoaks Stationers, Re Bath Glass and Re UKLI Ltd), rejected the defendant's proffered defences (belief that funds would arrive, alleged creditor agreements and an asserted realisable asset) as insufficiently supported by evidence, and concluded the conduct merited a middle‑bracket disqualification of seven years.

Background and parties. This was a first instance application by the Official Receiver for a disqualification order under section 6 of the Company Directors Disqualification Act 1986 against Mr Nduka Obaigbena, the sole director of Arise Networks Ltd, after the company was compulsorily wound up on 22 April 2016.

Nature of the application. The Official Receiver alleged a single charge of unfitness: that from 31 December 2014 Mr Obaigbena caused Arise to trade to the detriment of creditors with no reasonable prospect of paying creditors or avoiding insolvent liquidation.

Key factual matrix. Arise was at a pre‑revenue stage and generated no turnover; it was funded by interest‑free loans from associated companies (three named entities, funding originating in Nigeria). In September 2014 the Nigerian Central Bank imposed currency exchange restrictions that severely limited transfers from Nigeria. After December 2014 Arise failed to pay many suppliers, contractors and staff on time; creditor pressure increased and liabilities rose month on month through to liquidation. The company failed BARB review in December 2014, eliminating any prospect of advertising revenue in the short term.

Issues framed by the court. (i) Were the primary facts as alleged by the Official Receiver proved? (ii) Did those facts amount to unfitness under section 6 CDDA 1986, bearing in mind established authorities and the need not to judge conduct by hindsight? (iii) If unfit, what period of disqualification was appropriate?

Court's reasoning. The court accepted the Official Receiver's evidence (reports and documents) and found that liabilities were increasing from December 2014, that funding from Nigeria was uncertain in timing and amount, and that the director nonetheless continued to cause the company to trade and incur liabilities. The director's central defences — an expectation that funds would be made available later, creditor agreements and the existence of an asset referred to as an 'EPG' — were either unsupported or insufficient to show a reasonable prospect of creditors being paid. The judge treated the question of unfitness as a mixed fact‑law inquiry, applied established case law on unfitness and disqualification periods, found no evidence of dishonesty but concluded the conduct was seriously culpable and warranted a middle‑bracket order.

Decision and remedy. The court found the charge established and ordered disqualification for seven years, considering the case a serious example of trading to the detriment of creditors where the director gambled on uncertain external funding.

The court made a disqualification order (first instance application upheld). The judge found that Mr Obaigbena caused Arise Networks Ltd to trade from 31 December 2014 despite no reasonable prospect of paying creditors or avoiding insolvent liquidation; his conduct amounted to unfitness under section 6 of the Company Directors Disqualification Act 1986. Having regard to the seriousness of the conduct and applicable guidance, the court imposed a seven‑year disqualification period (middle bracket).