I didn't see anything about flying vs. not flying...the issue appears to be a problem operation and the troubles that the new DO may have inherited with it.
This buzz-word "self-disclosure" keeps popping up. When the original poster says "self-disclosure," what does he mean?
That's a very loaded phrase, and a potentially dangerous one.
A new DO needs to take stock of the situation. If he's on the certificate as the DO, the always has operational authority and control, and is always responsible for every aspect of the operation. He can delegate authority, but but can never abdicate respnsibility. When he grants authority to another person, even a required officer of the company such as the Chief Pilot or Director of Maintenance, he still holds the ultimate authority. Others may be grated elements of operational control, to include releasing a fight, but the DO is still ultimately responsible.
On arrival, a new DO needs to look over the operation with a critical eye. Chances are very high that the operation has problems...many 135 outfits are rife with problems, and a smart manager will find them and fix them rather than covering them up or continuing to run the operation business-as-usual.
The problem for the DO is that once the OpSpecs are ammended to show him as the Director of Operations, he's responsible for the whole shooting match. If the duty records are improper, for example, or if the aircraft are being operated on an improper maintenance schedule or program, he's responsible to explain to the FAA what has gone wrong.
I took over a 135 operation as DoM, (not DO), and the first thing I did was critically review the maintenance program. I found almost every aspect of what was being done to be inadequate, including the fact that the aircraft was being inspected in accordance with a program that was three years out of date. It was out of compliance in nearly every respect. I immediately brought in outside party assistance, and brought the aircraft current through not only the present inspection, but one more, and ensured that every service bulletin and AD was attended, as well as changing the tracking and maintenance program to reflect current practice and policy. This then went straight to the FAA for approval. I did not want to go to the FAA without a clear plan and proof that it was being swiftly handled.
That's not self-disclousre...that's finding fires and putting them out while they're small. The changes were expensive, and sweeping. The owner of the company had a meltdown, and I gave him a choice; hang the going out of business sign in the window today, or fix it. I didn't give him the choice of getting rid of me to cover it up, either; I let him know the problems were manifest, documented, and were in play. I left him no choice. When you are holding out your reputation as a named party to the operation, and the duty, liability, and responsibilities have become yours, the only thing to do is to take full ownership of the problem and fix it. Be proactive.
Document, document, document. A very big problem for the incoming DO is one who doesn't know the regulation. If you're going to to be a named officer in the company, you had better know that regulation better than the FAA, or it will bury you.
The FAA's big buzzword is "attitude of compliance." The FAA is very big on that, and I agree with that philosophy. If you can make clear that you're serious about being safe and legal, and taking great strides to make that happen, then in most every case the FAA will help you do it. Any wavering in sincerity will shoot you in the foot, however, so take care.
Manual re-writes are common, and necessary. Generally it's more like a General Operations Manual overhaul. This can be a good thing because as long as a concept is reasonable, the FAA will allow a very big amount of latitude in setting company policy via the GOM, and ultimately the OpSpecs that allow the operator to go to work. Remember that the GOM be used to hold the DO's feet to the flame. There's no FAA regulation that requires pilots to wear blue shirts with epaulettes and paisley ties, but if that's shown as a requirement in the company ops manual, the pilots can be held to it every bit as much as if it were FAA regulation...The DO will likewise be held accountable for every approved age in that manual, and had better know both the regulation and the manual to know where he or she truly stands.