Two marketing bosses disqualified for total of 12 years after causing their company to pay more than £830,000 to businesses they had connections with.
With offices in London and Sheffield, White Space Communications Ltd was incorporated in September 2000, providing web design and marketing services.
Jeffrey Alexander Roberts (65) and Anthony John Samuel Barry (56) were both appointed directors of the agency in 2013.
Two years after their appointment, however, the company went into administration in April 2015 and just under a year later, entered into liquidation in January 2016 owing at least £364,000 to creditors.
This triggered an investigation into the company's affairs by the Insolvency Service and investigators found that from May 2014, the two directors caused or allowed White Space to make £831,000 worth of payments or loans to companies they had connections with.
The directors failed to provide any explanation or valid commercial reason to investigators for the loans and the monies paid were unrecoverable, which meant creditors who were owed money in the liquidation lost out.
Jeffrey Roberts and Anthony Barry have now given disqualification undertakings to the Secretary of State for Business, Energy & Industrial Strategy having accepted they breached their fiduciary duties.
The bans prevent them from becoming directly or indirectly involved in the promotion, formation or management of a company for six years. Jeffrey's disqualification was made effective from 6 November 2018, while Anthony Barry's ban came into affect on 19 November 2018.
Martin Gitner, Deputy Head, Insolvent Investigations, part of the Insolvency Service said:
The Insolvency Service will not hesitate to investigate and seek to disqualify directors who have caused a company to loan or pay monies to connected parties rather than to the benefit of either the company or its creditors.
Notes
Mr Roberts, date of birth is October 1953 and resides in Lorgues, France.
Mr Barry, date of birth is December 1961 and resides in London.
The Company went into administration on 14 April 2015 and Creditors Voluntary Liquidation on 27 January 2016 with an estimated deficiency of £401,239.
Matters of unfitness, which Mr Roberts and Mr Barry did not dispute, were that from 22 May 2014, they breached their fiduciary duties in that they caused or allowed White Space Communications Limited ("White Space") to make payments or loans to connected companies, which were to the risk and ultimate detriment of creditors accrued from that point:
- They were both appointed as directors on 12 June 2013. In the period between 12 June 2013 and 22 May 2014 loans of £554,492 were recorded as having been made to companies connected to them and these companies were debtors of White Space in the sum of £554,492.
- During the period 22 May 2014 and 15 April 2015, further net payments of £178,662 were made to the connected companies with the sum being shown in the accounting records as owed to White Space at liquidation increasing to £831,394.
- From 22 May 2014 onwards returns totaling at least £184,636 were submitted in respect of Value Added Tax ("VAT"). In the same period, payments of £55,000 were made in respect of VAT, such that tax authorities submitted a claim for VAT totaling £183,152 (including surcharges) at liquidation.
- Sums outstanding in respect of Pay As You Earn/National Insurance Contributions increased from £212 due following month 5 of the 2014/2015 tax year (05/09/2014), to £106,369 being claimed by tax authorities at liquidation.
- Creditors outstanding at liquidation totaled at least £364,246 while loans outstanding from companies connected to the directors totaled £831,394 and were unrecoverable. The directors failed to provide any explanation or valid commercial reason for the loans.
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 or limited liability partnership
- be a receiver of a company's property
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings. Further information on director disqualifications and restrictions can be found here.
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. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency 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, and how to complain about financial misconduct, is available.
