Landlords victory over Administrators (DWF LLP)

Date: 25/02/14

A clear Judgment in favour of the landlords was handed down by the Court of Appeal yesterday in the litigation generated by the video games retailer, Game, going into administration in March 2012. This decision changes the position on the question of when rent is payable as an expense of the administration, and so in priority to unsecured debts.

One of the companies in the Game group was the tenant of numerous leasehold retail properties from which the group traded.  Most of the leases provided for rent to be payable quarterly in advance on the usual quarter days, as a result of which on 25 March 2012 approximately £10,000,000 in rent became due under the various leases.

The group entered into administration on 26 March 2012.  Whilst some stores were closed immediately many continued to trade in a new business which was rapidly sold to a separate company called Game Retail Limited.

At the heart of this appeal there were two recent well known High Court decisions:

In Goldacre (Offices) Limited v Nortel Network UK Limited (2009) the Court found that if a quarter’s rent payable in advance fell due during a period in which the administrators were retaining the property for the purpose of the administration, then the whole of the quarter’s rent was payable as an administration expense, even if the administrators were to give up occupation later in the same quarter.
In Leisure (Norwich) II Limited v Luminar Lava Ignite Limited (2012) the High Court decided that where a quarter’s rent payable in advance fell due before entry into administration none of it was payable as an administration expense, even if the administrators retained possession for the purposes of the administration for the whole of that quarter. In those circumstances rent was simply provable as a debt in the administration.

The consequence of those two decisions was that it became increasingly common for companies to enter into administration on the day immediately after a quarter date, thereby avoiding liability to pay the rent in full even if they retained possession of the leasehold property for the whole of that quarter.

Lord Justice Lewison, in a very clear judgment, overturned both the above decisions by applying the well-known “salvage principle” and making it clear that the application of that principle and the right of a creditor to prove for a debt in the insolvency were not mutually exclusive.

The salvage principle has its basis in cases dealing with a landlord’s right to levy distress on goods following on from the liquidation of the tenant.  The principle is well expressed in the case of Re Lundy Granite Co [1870-1871] in which James LJ stated:

“but in some cases between the landlord and the company, if the company for its own purposes, and with a view to the realisation of the property to better advantage, remains in possession of the estate, which the lessor is therefore not able to obtain possession of, common sense and ordinary justice require the Court to see that the Landlord receives the full value of the property.  He must have the same rights as any other creditor, and if the company choose to keep the estates for their own purpose, they ought to pay the full value to the landlord, as they ought to pay any other person for anything else, and the Courts ought to take care that he receives it”.

Over subsequent years this principle was gradually extended by the Courts beyond the narrow confines of distraint.

The Court of Appeal in Game set out their views clearly, stating that it must be remembered that the salvage principle is based in equity and not common law. As such, the relevant insolvency office holder must make payments at the rate of the rent due under the lease for any period during which he retains possession of the demised premises for the benefit of the winding up or administration.  That rent will be treated as accruing from day to day, and those payments are payable as expenses of the winding up or administration.  The duration of the period is a question of fact, and is not determined merely by reference to which rent days occur before, during or after that period.

It will be interesting to see whether this issue goes to the Supreme Court, given the significant impact that it will have on the conduct of administrations. However, for the moment at least the position seems to be clear and considerably fairer.

The Scottish courts considered for the first time the question of the payment of rent as an expense of an administration in Cheshire West and Chester Borough Council in the Administration of Springfield Retail Limited [2010]. The court held (following the decision of the English courts in the case of Goldacre) that rent in respect of the period during which the third party occupied the property in terms of the licence should be paid as an administration expense. It is therefore anticipated that The Court of Appeal decision in Game will be followed in Scotland.

In Scotland, the landlord should consider exercising his hypothec which is the landlords’ right in security over moveables on the premises (such as stock and fixtures and fitting). The landlord has a preferential claim in the insolvency if they exercise the hypothec. The hypothec covers arrears of rent due but unpaid.

The case is fully reported as Re Games Station Limited (Jervis –v- Pillar Denton Limited) [2014] EWCA Civ 180.

For further information contact Alan Walker (Partner, Manchester), Sophie Morley (Associate, Leeds) or Philip Knight (Senior Solicitor, Edinburgh)

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Jail for Newcastle health club crook who broke ban and conned investor (Insolvency Service)

Jail for Newcastle health club crook who broke ban and conned investor

14 May 2013 11:00

Michael Jeffels, a company director and a former semi-professional footballer, has been sentenced to 15 months immediate imprisonment after pleading guilty to running a company while banned and posing as a millionaire to convince an investor to part with tens of thousands of pounds.

Mr Jeffels pleaded guility and was sentenced at Newcastle Crown Court, following an initial investigation by The Insolvency Service and a full criminal investigation and prosecution by the Department for Business Innovation and Skills (BIS).

He was also convicted of perverting the course of justice for forging a document to make a claim for damages following a car accident.

Mr Jeffels had been banned from running a company for six years for his conduct while director of a previous company NECOE Ltd, which collapsed in 2002 owing £145,000 to creditors.

But the investigation showed that from 30 December 2007 to 16 September 2009 Mr Jeffels set up and ran a leisure club chain Ultimate Health and Fitness Ltd, (Ultimate Health), in clear breach of this disqualification.

Furthermore, Mr Jeffels posed as millionaire to dupe a businesswoman Elizabeth Chambers into investing substantial sums in the company.

Mr Jeffels even persuaded a former colleague and magistrate, Kamiljeet Kundi, to write a letter to Ms Chambers to vouch for his financial position. In fact, Mr Jeffels’ bank had stopped a number of payments from his account because of insufficient funds.

She agreed to a three-way partnership, with Mr Jeffels and his girlfriend Gillian Grainge, where each would invest £25,000 plus VAT, to expand his business from one club, Kicks Leisure – which he was legally running as a sole trader – by leasing two more clubs. Ms Chambers borrowed the money from a friend on a short term basis and handed it over to Mr Jeffels in June 2008. He then persuaded her to part with a further £10,000, saying it was needed urgently to pay stamp duty or they risked losing the clubs.

Mr Jeffels used the money to lease two clubs, in Wallsend, North Tyneside and in Oldham but neither he nor his girlfriend invested any significant funds of their own. More than £130,000 in membership fees from these clubs was then paid into Mr Jeffel’s bank account. It is unclear where this money has now gone.

Confiscation proceedings for proceeds of crime have been commenced by BIS against Mr Jeffels.

Mr Jeffels was also convicted of perverting the course of justice for forging a letter, purporting to be from Ms Chambers, which he used to try and claim damages following a car accident in 2008. The letter said he had been employed by Ultimate Health and Fitness Ltd as a consultant at the time of the accident and had suffered loss of earnings of £40,000.

Deputy Chief Investigation Officer Mike Williams from the Department for Business Innovation and Skills said:

”Mr Jeffels ignored the law and broke his ban to enrich himself. He is now in jail. His fate should be a warning to others tempted to ignore a disqualification order. Not only do you risk a prison sentence but we can also confiscate any ill-gotten gains acquired through acting in breach of a disqualification.”

Notes
1. Michael Jeffels, 29/04/1964, was sentenced by Mr Justice Eder at Newcastle Crown Court on 9 May 2013.

2. Section 13 of the Company Directors Disqualification Act 1986 makes it an offence to act as a director or be involved in the management of a limited company whilst disqualified. Mr Jeffels was disqualified from acting as a director for six years from 12 May 2006 until 11 May 2012. This disqualification arose from his conduct as a director of company NECOE Ltd, which went into liquidation on 27 November 2002 with a total deficiency of £145,655. On 1 November 2002, knowing that the company was insolvent, Mr Jeffels caused company funds of £123,455.93 to be paid to himself, ahead of other unsecured creditors. The funds came from the sale of the company’s premises on which VAT was charged. The VAT was paid to the defendant rather than to HM Customs and Excise, as it should have been.

3. Timeline of significant events in case.
6 MARCH 2012 First hearing at Newcastle Magistrates’ Court
5 NOVEMBER 2012 Mr Jeffels pleads guilty to one charge of acting as a director while disqualified and one count of perverting the course of justice
9 MAY 2013 Mr Jeffels was sentenced at Newcastle Crown Court

4. Offences:

Michael JEFFELS, between the 30th day of December 2007 and the 16th day of September 2009, being disqualified from so doing by virtue of an undertaking given to the Secretary of State, directly or indirectly was concerned or took part in the promotion, formation and management of a company, namely Ultimate Health and Fitness Ltd, without leave of the Court.

Michael JEFFELS, on days between the 31st day of August 2008 and the 22nd day of January 2010, with intent to pervert the course of public justice, did a series of acts which had a tendency to pervert the course of public justice in that he brought and prosecuted a claim for lost earnings against Malcolm Evans which was false.

5. Sentence:
Mr Jeffels was sentenced to 15 months’ imprisonment in total which was split as follows: two months for acting in the management of a limited company whilst disqualified, and 13 months for perverting the course of justice. He was disqualified from acting as a director or being involved in the management of a limited company for a further eight years.

6. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk.

7. BIS’ mission is to build a Dynamic and Competitive UK economy, in particular by creating the conditions for business success and promoting an open global economy. The Criminal Investigations and Prosecutions team contributes to this aim by taking action to deter fraud and to regulate the market. We investigate and prosecute a range of offences, primarily relating to personal or company insolvencies. Further information about the work of the Criminal Investigations and Prosecutions team is available at https://www.gov.uk/fraud-bis-investigations-prosecutions-and-enforcement

Need help in avoiding situations like these?

The UK authorities, notably HMRC and the Insolvency Service,  have been having a field day in recent weeks with the number of successful prosecutions and disqualifications that they have reported.

How many of the individuals and companies might have escaped the trauma had they involved professional help at an early stage.

Many of the successes stem from the inability, or unwillingness, to keep a basic set of accounting records!!! In some cases it is out and out fraud which probably would have happened in any event if proper controls and checks and balances have not been set up.

Have a look at the blog for a selection of the best examples.

http://www.lease-a-finance-director.co.uk/blog.

If you need help to avoid such situations, then use the contact form on the website.

Seven year ban for payroll boss who left £15m hole in accounts (Insolvency Service)

Seven year ban for payroll boss who left £15m hole in accounts

27 March 2013 09:30
A Hertfordshire resident Greg John Middleton, director of Sigma Labour Services Limited, a company that provided payroll services in Essex, has been disqualified from acting as a director for seven years for failing to keep proper accounts, which meant transactions worth £15m went unexplained.
The disqualification follows an investigation by The Insolvency Service.

Mr Middleton, 43, of Rickmansworth, Hertfordshire has given an undertaking that he will not act as a director of a limited company from 1 April 2013 to April 2020.

Sigma Labour Services Limited entered voluntary liquidation on 20 May 2011. The Insolvency Service investigation found that the company’s records failed to:
•    establish when it had started trading;
•    the extent and nature of the company’s business; or
•    explain £15,000,000 of transactions in and out of the company’s bank account.
This lack of a proper paper trail also meant it was not possible to establish the company’s true tax debt.

Commenting on the disqualification, Mark Bruce, a Chief Examiner in Company Investigation Team South at The Insolvency Service said:

“The substantial period of this disqualification reflects the fact that when a company fails to keep adequate financial records, it could lead to other, more serious, impropriety in relation to the management of its affairs. The sheer scale of unexplained transactions during the last 11 months of this company’s trading raises serious questions.

“Directors have a vital duty to keep proper records, especially when a company is experiencing financial difficulties. Directors who neglect this responsibility damage business confidence and are bad for growth. The Insolvency Service will seek to remove them from the business environment.”

Notes
1. Sigma Labour Services Limited was incorporated on 14 May 2009 and went into voluntary liquidation on 20 May 2011.

2. Mr Middleton gave an undertaking on 11 March 2013 to the Secretary of State not to be a director for seven years. The disqualification commences on 1 April 2013.

3. Disqualification undertakings were introduced in April 2001, they are the administrative equivalent of a disqualification order but do not involve court proceedings. Without specific permission of a court, a person with a company directors disqualification, including undertakings, cannot act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property.

4. Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies.

5. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency.

10 more years for shadow director’s breach of disqualification order (Insolvency Service)

10 more years for shadow director’s breach of disqualification order

21 March 2013 11:00
Stuart Wright, a director of Opticore Ltd, a telecommunications cabling company that traded from sites in Chorley, Lancashire and Livingston, West Lothian has been disqualified for a further ten years for breaching an existing five-year ban. The disqualification follows an investigation by the Insolvency Service.
Mr Wright, 49, of Willaston, Neston has given an undertaking that he will not act as a director, control or manage a company from 1 April 2013 until April 2023.

Mr Wright was formally appointed a director of Opticore Ltd between 25 February 2005 and 16 August 2006, but continued to act as a shadow director. In January 2007, he was banned from being a director for five years, following his conduct while in control of a separate company, Livtel Ltd (wound up in 2004).

Despite this ban, Mr Wright continued to act as a shadow director for Opticore Ltd, controlling financial operations and handling negotiations for which he was well paid, in clear breach of the undertaking he had signed.

Opticore ceased to trade on 10 June 2011 and entered voluntary liquidation on 5 July 2011 owing over £600,000 to creditors.

Commenting on the disqualification, Robert Clarke, Head of Company Investigations, Birmingham said:
“The substantial period of the undertaking in this case clearly shows that those who are disqualified must respect the restrictions placed upon them or they will face a further lengthy ban to protect the public.

”Directors are disqualified for good reason – to protect the public and the broader business environment. Those who ignore the restrictions placed upon them are seeking to abuse the system and will not be tolerated.”

Notes
1. Opticore Ltd was incorporated on 6 November 2002, ceased trading on 10 June 2011 and entered voluntary liquidation on 5 July 2011. The company operated from two offices, one in the building of its main contractor at Chorley and the other in Livingston, Scotland

2. On 11 March 2013 an undertaking was accepted from Mr Stuart Wright, which is due to commence on 1 April 2013.

3. Livtel Ltd was wound up in Birkenhead County Court on 22 March 2004.

4. A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property.

5. Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies/director-disqualification-and-other-action.

6. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency

Family of tax-dodgers shepherded out of security industry for over 15 years (Insolvency Service)

Family of tax-dodgers shepherded out of security industry for over 15 years

19 March 2013 13:00
Husband and wife team Heather and Lance Shepherd and their son James Shepherd, who ran Shepherd Security Ltd, an alarm company in Preston, have been banned from being company directors for a total of 15 and a half years for failing to pay tax and – in Heather Shepherd’s case only – for acting as a director while bankrupt.
The disqualifications, which follow an investigation by the Insolvency Service, were as follows:
•    Heather Shepherd banned for nine years
•    Lance Shepherd banned for four years
•    James Shepherd banned for two and a half years
The longer term of Heather Shepherd’s ban reflects the fact that, as well as her part in the company’s failure to pay tax, she also acted as a director, although not formally appointed, whilst not discharged from bankruptcy. Her bankruptcy was on the petition of HMRC.

Shepherd Security was incorporated on 17 April 2008 and commenced trading in May 2008 as a 24-hour alarm security centre. The investigation by the Insolvency Service found that the members of the Shepherd family failed to pay tax totalling £186,332.

Specifically, Heather and James Shepherd failed to pay tax from September 2008, just a few months after the company commenced trading. Lance Shepherd was appointed as a director of the company from 15 October 2009 and failed to pay tax from that date.

Commenting on the disqualification, Robert Clarke, Head of Company Investigations Birmingham said:

“A bankrupt who continues to act as a director when explicitly restricted from doing so, shows a total disregard for the insolvency regime, creditors and the business community. What’s more those directors who fail to pay their taxes are gaining an unfair advantage over other businesses and cheating the government.

“The disqualifications of this family for a total of 15 and a half years sends a clear message to others that if they act as directors when not allowed to do so or fail to pay their taxes, then they will be investigated by the Insolvency Service and removed from the business environment.”

Notes
1. Shepherd Security Ltd was incorporated on 17 April 2008, commenced trading in May 2008, ceased trading in October 2010 and entered voluntary liquidation on 29 October 2010.

2. James Shepherd was formally appointed as a director on 17 April 2008, Lance Shepherd was appointed on 15 October 2009 and Heather Shepherd was never formally appointed as a director, but acted as a director in that she exercised control over the financial operations and received the same or similar remuneration to the formally appointed directors.

3. On 31 October 2012 an undertaking was accepted from Heather Cameron Shepherd, which commenced on 21 November 2012. On 1 November 2012 an undertaking was accepted from James Cameron Shepherd, which commenced on 22 November 2012 and on 12 March 2013 an undertaking was accepted from Lance Shepherd, which is due to commence on 2 April 2013.

4. Heather Cameron Shepherd and Lance Shepherd were both previously directors of Shepherd Security (UK) Ltd, which was incorporated on 17 January 2007 and traded as a provider of security installation and monitoring and which went into voluntary liquidation on 08 May 2008. Also Heather Cameron Shepherd and Lance Shepherd were directors of Shepherd Security Systems Ltd which was incorporated on 10 June 2003 and went into administration on 26 January 2007.

5. Heather Cameron Shepherd was made bankrupt on 06 August 2008 on the petition of HMRC. On 27 May 2009 Mrs Shepherd’s automatic discharge from bankruptcy was suspended due to her non-cooperation with the Official Receiver and she remains bankrupt.

6. A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property. Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies

7. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency

Construction boss banned for 13 years for filing false documents (Insolvency Service)

Construction boss banned for 13 years for filing false documents

19 March 2013 12:00
Qasim Ali Munir, director of Farman Homes Limited, a construction company based in Edgeware, Middlesex, has been disqualified for 13 years for using false documents for personal gain, following an investigation by The Insolvency Service.
Mr Qasim Ali Munir, 37, from Stanmore, north west London, has been disqualified from acting as a company director until February 2026. Mr Munir was also known as Asim Ali, Ali Munir and Munir Qasim Ali.

Farman Homes was placed into administration on 19 March 2010, owing creditors approximately £500,000.

The Insolvency Service investigation found that Mr Munir had provided a false document to HM Land Registry, via his solicitors, in order to release a charge held by Farman Homes’s bank on a property he had purchased from Farman Homes. By releasing the charge, Mr Munir managed to ensure that the sale proceeds from the property were paid to him and his associates – and not to the bank.

In addition, Mr Munir had failed to co-operate with Farman Homes’ administrators and failed to deliver up any of Farman Homes’ accounting records. As a result it was not possible to verify certain aspects of Farman Homes’ trading or to establish its assets and liabilities at the date of administration.

Claire Entwistle, Director of Company Investigations North for The Insolvency Service, said:

“Submitting false documents for personal gain is a very serious matter and the courts rightly treat it as such. Directors who fail to do right by their creditors will be in our sights.

“The Insolvency Service will seek to remove them from the business environment.”

Notes
1. Qasim Ali Munir’s date of birth is 31 October 1975

2. Farman Homes Limited was incorporated on 20 July 2004 and went into Administration on 19 March 2010

3. Qasim Ali Munir was the sole registered director of the company at the date of Administration.

4. A disqualification order was made on 27 February 2013.

5. Without obtaining permission from a court, a disqualified person may not:
•    act as a director of a company;
•    take part, directly or indirectly, in the promotion, formation or management of a company;
•    be a liquidator or administrator of a company;
•    be a receiver or manager of a company’s property.
Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies/director-disqualification-and-other-action.

6. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorizes and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice.

Property developer twins banned for 22 years for scamming £2.5m from public (Insolvency Service)

Property developer twins banned for 22 years for scamming £2.5m from public

19 March 2013 11:30
Two brothers, both directors of Independent Property Consultants Limited (IPC), a company that marketed property developments in Bulgaria and Cape Verde, have been disqualified from being directors for a total of 22 years for ripping off the public to the tune of £2.5 million. The disqualifications follow an investigation by The Insolvency Service.
The 52-year old twins Paul John Aspden, of Lytham St. Annes, Lancashire and Peter Keith Aspden, but currently resident in Cape Verde, were joint directors of IPC. They have now each been disqualified from acting as directors for 11 years, from 4 April 2013 until April 2024, after proceedings that took 12 months.

The Insolvency Service investigation showed that members of the public paid over £1,500,000 to IPC for properties in four Bulgarian developments but these properties never materialised.

The Aspden twins also misled clients into almost £1,000,000 for apartments in the Sal Vista resort development in Cape Verde. Again, customers did not receive the properties they had paid for.

As well as failing to provide the properties customers had paid for, IPC also failed to properly protect customers’ money. Inadequate ring-fencing led to at least £643,244 of clients’ funds being lost and investigators were unable to establish where the money had gone.

Commenting on the disqualifications, Ken Beasley, Official Receiver at the Insolvency Service’s Public Interest Unit, said:

“The Aspden brothers were responsible for significant financial losses suffered by members of the public who never received the foreign properties they paid for. The company misled its customers into making payments for foreign properties and then the directors recklessly failed to protect this money

“By handing down 11-year disqualifications, the Court has shown that such conduct by directors will not be tolerated. The Insolvency Service will take tough action to put a stop to companies trading against the public interest and we will seek to remove culpable directors from the business environment.”

Notes
1. Independent Property Consultants Limited was incorporated on 3 September 2004. The company traded from premises at Unit 7, The Pavillions, Avroe Crescent, Blackpool, FY4 2DP and Unit 39, Cayley Court, Hopper Hill Road, Scarborough, YO11 3JY. The Registered Office of the company was 42-44 Chorley New Road, Bolton BL1 4AP.

2. The company was wound up by the Court on grounds of public interest on 26 May 2010 an investigation by the Insolvency Service authorised by the Secretary of State for Business Innovation and Skills. There were no assets and an estimated deficiency to creditors of £2,573,933.

3. The Court ordered that both Mr Paul John Aspden and Mr Peter Keith Aspden be disqualified from acting as directors for eleven years. The periods of disqualification commence on 4 April 2013.

4. Without specific permission of a court, a person with a Company Directors Disqualification, cannot act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property.

5. Further information on director disqualifications and restrictions can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies/director-disqualification-and-other-action.

6. The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency

Four year ban for tax dodging Essex construction boss (Insolvency Service)

Four year ban for tax dodging Essex construction boss

07 March 2013 09:30
Gary Stephen Emerick, director of general construction and civil engineering company, Hire & Mechanical Services Limited, based in Canvey Island, Essex, has been disqualified for four years for failing to pay tax. The disqualification follows an investigation by The Insolvency Service.
Mr Emerick, 55, of Canvey Island, Essex has given an undertaking to the Secretary of State for Business, Innovation and Skills, that he will not act as a director of a limited company from 25 March 2013 until March 2017.

Hire & Mechanical Services Limited, whose principal activity was construction equipment and tool hire and groundworking, went into liquidation on 27 June 2011 owing at least £527,175 to creditors. This debt included £360,872 to owed to HM Revenue and Customs (HMRC) in unpaid tax, almost half of which, or £156,080, was made up of undeclared VAT.

The Insolvency Service investigation showed that the company’s unpaid taxes dated all the way back to when it started trading in May 2009. During its two years of trading, the company paid just £47,246 in tax, which was a fraction of what it owed.

Commenting on the disqualification, Mark Bruce, a Chief Examiner at The Insolvency Service said:

“Directors who seek an unfair advantage over their competitors by not paying tax are damaging commercial confidence and harming the UK’s reputation as a place to do business. They should not expect to get away with it.

“Other directors tempted to follow this path should remember that if they run a business in a way that is detrimental to either its customers or its creditors they lose the protection afforded by limited liability. The Insolvency Service will investigate them and seek to remove them from the business environment.”

Notes
1. Hire & Mechanical Services Limited was incorporated on 16 January 2009 and went into liquidation on 27 June 2011. The company’s registered and trading address was at 14 Sandhurst, Kings Road, Charfleets Industrial Estate, Canvey Island, Essex SS8 0SA.

2. Mr Emerick gave an undertaking on 1 March 2013 to the Secretary of State not to be a director for four years. The disqualification commences on 25 March 2013.

3. Disqualification undertakings were introduced in April 2001, they are the administrative equivalent of a disqualification order but do not involve court proceedings. Without specific permission of a court, a person with a company directors disqualification, including undertakings, cannot act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property.

4. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.bis.gov.uk/insolvency

Cambridge metal recycler gets eight months for failing to keep proper accounts (Insolvency Service)

Cambridge metal recycler gets eight months for failing to keep proper accounts

06 March 2013 10:00

Neil John Bowers, a company director, has been sentenced to eight months imprisonment suspended for 18 months at Cambridge Crown Court, after pleading guilty to failing to preserve proper company records and defrauding creditors.

His co-director Andrew William Villis has also been sentenced to 120 hours unpaid work after he pleaded guilty to failing to preserve company records.

The convictions follow an initial investigation by The Insolvency Service and a full criminal investigation and prosecution by the Department for Business, Innovation and Skills (BIS).

Mr Bowers and Mr Villis were both directors of Waste 2 Go (Cambs) Limited, a recycling and scrap company based in Cambridge, that went into liquidation on 13 July 2009 owing £139,561.35 to creditors.

Mr Villis presented some records to the Official Receiver in October 2009 but these were incomplete and, despite numerous requests, nothing else was provided by either director.

The Official Receiver tracked down bank statements for the company and discovered that shortly prior to the liquidation, and at a time when the company was being chased by creditors, £33,514.93 had been paid to Ferry Group Limited, a company of which Mr Bowers was also a director.

Mr Bowers was sentenced to eight months imprisonment suspended for 18 months and ordered to do 120 hours unpaid work.

The court also ordered him to pay compensation of £33,514.93 to the Official Receiver, with £10,000 to be paid immediately and £7,400 in costs.

Mr Villis was sentenced to 120 hours of unpaid work and ordered to pay £7,400 in costs.

Deputy Chief Investigating Officer Ian West from the Department for Business Innovation and Skills said:

“Company Directors should take note that it is a criminal offence to fail to keep adequate accounting records. They should be in no doubt that the Department of Business will prosecute those that ignore this warning.”

Notes
1. Neil John Bowers of Floods Ferry in Cambridgeshire and Andrew William Villis of Wisbech were both directors of Waste 2 Go (Cambs) Limited, which entered liquidation on 13/07/09.

2. The directors of a company are required to ensure that the company keeps adequate accounting records, that these are preserved for the requisite number of years and in the case of a liquidation are delivered up to the liquidator or Official Receiver. Failure to carry out any of these duties can amount to a criminal offence contrary to the Companies Act 2006 or the Insolvency Act 1986.

Similarly, as a director you cannot enter into transactions to defraud creditors of the company and this can also amount to a criminal offence contrary to the Insolvency Act 1986.

3. Timeline of significant events in case.
28/08/12 First hearing at the Magistrates’ Court
25/09/12 Case committed to the Crown Court
28/01/13 Plea and Case Management Hearing at the Crown Court
05/03/13 Crown Court Sentencing

4. Offences:
STATEMENT OF OFFENCE
FAILURE TO CAUSE A COMPANY TO PRESERVE ADEQUATE ACCOUNTING RECORDS, contrary to Section 389(3) of the Companies Act 2006

PARTICULARS OF OFFENCE
Neil John Bowers, between the 24th day of September 2006 and the 3rd day of March 2012, being an officer of Waste 2 Go (Cambs) Limited, was in default in that he failed to take all reasonable steps for securing compliance by the company with Section 388(4) of the Companies Act 2006 in that the company did not preserve accounting records for three years from the date on which they were made as required by s 388(4) of the Companies Act 2006.

STATEMENT OF OFFENCE
FAILURE TO CAUSE A COMPANY TO PRESERVE ADEQUATE ACCOUNTING RECORDS, contrary to Section 389(3) of the Companies Act 2006

PARTICULARS OF OFFENCE
Andrew William Villis, between the 28th day of February 2007 and the 3rd day of March 2012, being an officer of Waste 2 Go (Cambs) Limited, was in default in that he failed to take all reasonable steps for securing compliance by the company with Section 388(4) of the Companies Act 2006 in that the company did not preserve accounting records for three years from the date on which they were made as required by s 388(4) of the Companies Act 2006.

STATEMENT OF OFFENCE
ENTERING INTO A TRANSACTION IN FRAUD OF CREDITORS, contrary to Section 207(1)(a) of the Insolvency Act 1986

PARTICULARS OF OFFENCE
Neil John Bowers, between the 23rd day of February 2009 and the 1st day of May 2009, being an officer of Waste 2 Go (Cambs) Limited, a company which was ordered by the court to be wound up on the 13th day of July 2009, made or caused to be made a transfer of the company’s property, namely £33,514.93.

5. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk.

6. BIS’ mission is to build a Dynamic and Competitive UK economy, in particular by creating the conditions for business success and promoting an open global economy. The Criminal Investigations and Prosecutions team contributes to this aim by taking action to deter fraud and to regulate the market. We investigate and prosecute a range of offences, primarily relating to personal or company insolvencies.

7. You can now subscribe to get e-mail alerts from The Insolvency Service. To subscribe, go to our website The Insolvency Service | BIS and you will see a button to “sign up for email alerts and newsletters”, or click on the following link: https://public.govdelivery.com/accounts/UKBIS/subscriber/new