Joint Board Question 2021: This Must Go No Further Than The People You Tell

Posted on Jan 14, 2021. by NTI


This is the most perfect question for the JIEB Corporate Insolvency Paper for later this year. All made up, of course, but it strikes a familiar note.

Ironical Limited are a very big construction company, employing about 43,000 people on large projects such as listed former power stations, maintaining 50,000 homes for military personnel, keeping up 50 prisons or so and getting involved in spectacularly huge vanity rail projects in the UK. You could almost describe Ironical as an 'integrated support services business', holding about 450 Governmental contracts, spanning the UK education, justice, defence and transport ministries. Effectively, it was way too big an organisation to go broke.

Or so you would think.

The Joint Board like to spatter their question facts with numbers, so let's add a few for dramatic effect. In 2016, Ironical had sales of £5.2 billion and until July 2017 boasted a market capitalisation of almost £1 billion. However, due to inept management and what we know now to be dodgy dealings, the company so astute at building and construction collapsed under the weight of itself in January 2018, having amassed a £1.5 billion debt pile.

Oh no. But how?

The baddies in this story, or so we would be led to believe at the beginning of it, were monsters such as Santander UK, HSBC and Barclays, who were reluctant to lend the company any more cash. Even though it really, really needed it. There was a profit-warning in July 2017, even as the company's share price was slaloming from 240p to what would eventually be two coins in a homeless man's bucket just before it entered insolvency proceedings. Even as the skies were darkening around it Ironical were being awarded large contracts during the period warnings were being made and the company was known to be in financial difficulty (but surely that is Wrongful Trading? Hold on, we are not done yet). 

During this period, the nasty directors, such as Dick Howardson (made up for the sake of needless anonymity, but we will be revealing his true identity later), who headed the company from 2012 until July 2017, earned £1.5 million in 2016, which included £245,000 in bonuses and £231,000 in pension contributions, The same was true of some of Dick's colleagues, who were also promised golden handshakes and the names of young Asian women who could ease their troubled souls (we made that last bit up; there is no way the Joint Board would ever include such salciousness in their question facts, but it adds colour and is a short-cut to understanding the despicability of some of these grey-suited bank robbers).

Time travel forward to today (Thursday 14 January) and it appears that eight former directors of Ironical (put that name into an anagram solver) could be banned from company boardrooms for many years after the Government began legal action against them over the collapse of the construction group.


Why has action been taken today? (4 marks)

Well, the new Business Secretary, Kwasi Kwarteng, had to start disqualification proceedings today as the statutory three year period to take proceedings under the CDDA 1986 ends tomorrow. (Talk about the skin of Kwasi's teeth.)


Is it important to the facts of this case that a report by MPs shortly after the collapse criticised Ironical’s “reckless pursuit of growth” and a “chronic lack of accountability and professionalism”? (5 marks)

Damn, yes. The behaviour of the directors may have been de rigeur in the construction trade, but you wouldn't want them running your bath.


How long can Dick and his chums expect to be disqualified for? (3 marks)

15 years.


Is there any way they could be disqualified for more time? (3 marks)

Only if they had been born in, worked in and messed around in Iran, not the United Kingdom.


What is Dick Howardson's real name? (5 marks)

Richard Howson. The company? Carillion.

Say bye-bye to Richard, children.

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