Company directors banned after making illegal payments

Three directors have been banned from running a company for up to seven years after making illegal payments to benefit themselves instead of creditors.

The three directors ran a family owned demolition company that was placed into liquidation with an estimated deficiency to creditors of £1,755,782.

Despite this, the directors continued to trade to their own benefit and incur further liabilities. They made payments of at least £155,310.45 to their associates and offset liabilities due to the company from their connected businesses.

Rob Clarke, Head of Insolvent Investigations North, part of the Insolvency Service, said: “This was a cynical attempt by the directors, in the clear knowledge that their company was insolvent, to extract money that should have been paid to other creditors.

“The Insolvency Service will take robust action against this sort of misconduct which is a clear abuse of limited liability.”

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.

Please contact us if you would like more information about the issues raised in this article or any aspect of company law.


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