The former director of a Liverpool-headquartered fabric and furniture retail chain which collapsed into administration in 2013 has been banned from acting as a director for six years for failing to maintain adequate accounting records.
The Bankrupt Shop, a retailer of fabric and furniture, traded from seven locations across the UK. It went into administration in December 2013 with an estimated deficiency of £158,589. An investigation by the Insolvency Service found that expenditure of £256,870 remained unexplained, including almost £48,000 spent while one of the directors was in Spain.
Sue MacLeod, chief investigator at the Insolvency Service, said: “Company directors should note from this enforcement result that any failure to maintain or deliver up adequate accounting records is likely to lead to serious censure.
“In this particular case, Mr Georgeson was aware of the requirement to maintain or deliver up the company’s accounting records, yet failed to do so, with the result that transactions amounting to several thousand pounds could not be explained.
“This disqualification is a reminder to others tempted to do the same that the Insolvency Service will rigorously pursue enforcement action and seek to remove from them the privilege of trading with limited liability to protect the public for a lengthy period.”
The case serves a salutary reminder that directors who act improperly and against the interests of a company’s creditors can’t simply walk away ‘scot free’ following the company’s insolvency. In certain circumstances, directors can be called upon to personally contribute to the Company’s assets and Insolvency Practitioners have wide powers to review the conduct of directors and in particular to overturn transactions which may have been at an undervalue or which were intended to prefer one creditor over the creditors as a whole or which sought to put assets beyond the reach of creditors.
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