Insights & advice

Directors guilty of contempt after disposing of firm’s goodwill

Directors Guilty of Contempt After Disposing of Goodwill | Middletons Law | Andover Solicitors

Two directors have been found guilty of contempt of court after disposing of their company’s goodwill assets in breach of a freezing order.

The two directors were involved in a family based agency which sold mechanical breakdown insurance policies.

An insurance company became unhappy with the way the directors ran the agency and blamed them for causing it to make substantial losses. It obtained a freezing order over the agency’s assets.

The directors then set up a new company using a different insurer but using the same network of contacts, office premises, staff telephone number, website text and product documentation.

The court held that the directors had underpaid their original insurance company by £2.3m and had deliberately disposed of their company’s assets in the form of goodwill to frustrate the freezing order.

They were found guilty of contempt of court; one director was sentenced to four months imprisonment and the other to nine months.

The case then came before the Court of Appeal which held that the elements of goodwill, such as the network of contacts, were the very foundation of the directors’ business and as such were covered by the freezing order. The appeal against contempt of court was dismissed.

The Appeal Court said that breaches of a freezing order would usually merit an immediate sentence of imprisonment. However, in this case there was considerable personal mitigation and so suspended sentences were substituted.

Please contact Chris Jolly in our Westbury office on 01373 865577 about the issues raised in this article or any aspect of company law. Or email

We provide client focussed legal advice and assistance.

Our solicitors strive to deliver the best advice and assistance and an outstanding customer experience.

We serve our customers right the way across Wiltshire and Hampshire with offices in Warminster, Amesbury and Stockbridge.

Enquire about our services today.

Just a short note to once again express my sincere thanks to you, Sue and the M&U team, for all your help, cooperation and first class professional support. I am most grateful to you all.

Chris Stephenson, Warminster

Middletons Solicitors uses cookies to ensure that we give you the best experience on our website. If you continue we assume that you consent to receive all cookies on this website.