PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.
Directors of a Scottish conference centre and hotel have been banned from acting as company directors for a total of 16 years.
The Insolvency Service launched an investigation after the business went into liquidation and £60,000 went missing from company accounts. Faced with debts of £269,500, the two directors went ‘on the run’ in an attempt to avoid the investigation.
Both individuals failed to keep financial records, so it has been impossible for investigators to ascertain the legitimacy of their transactions. Despite this, the Insolvency Service was able to discover, through bank records, that the sale of a company asset in May 2007 resulted in a deposit of over £1.52 million into an associated company’s account. The directors withdrew cheques to the value of £754,000 in a four-month period in 2006-2007.
In March 2008, the company’s net liabilities amounted to a debt of more than £80,000, and as such the directors’ transactions were carried out to the detriment of the creditors. The Insolvency Service found that the directors’ conduct had shown that they were unfit to run a company and sought the disqualifications in the public interest. Neither director cooperated in the investigation or attended court to defend themselves.
Directors who flagrantly ignore the legislation governing their conduct – even those who do not participate in wrongdoing but who acquiesce in it taking place – can expect to receive severe penalties. If you have misgivings about the behaviour of your fellow directors, contact us for advice.