Director disqualified for paying associates instead of creditors

Published: 19 February 2018

Category: News

A director has been disqualified from running a business for 6 years because he paid large sums of money to his associates instead of creditors after his clothing company got into difficulties.

Ronald Trevor Barnes ran Cleanliness Ltd, a manufacturer of personal care products in Nottingham.

The company went into liquidation on 1 August 2014 owing £1.2m to creditors, of which £510,100 was owed to the landlord, £380,850 to trade and expense creditors, £354,736 to the director and £53,644 to other creditors.

From May 2013 to 15 August 2014, Mr Barnes caused the company to pay large sums of money to connected parties, the majority of which were not for the benefit of the company and to the detriment of creditors.

Sue MacLeod, Chief Investigator of the Insolvency Service said: “The Insolvency Service will not hesitate to investigate directors who have caused a company to pay monies to connected parties rather than to the benefit of either the company or its creditors and will rigorously seek disqualification in all such cases.”

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 or take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership.

Anyone subject to a disqualification order is also bound by a range of other restrictions.

Please contact Phil Downing in our Business, Corporate & Commercial Property Team if you would like information about business regulations, compliance and company law.