9 year ban for company director who failed to keep adequate records
Christopher McDonnell has been disqualified from acting as a director for 9 years for failing to maintain, preserve and deliver up accounting records after a company was placed into Liquidation. Mr McDonnell’s disqualification follows an investigation by the Insolvency Service.
Directline UK Limited was incorporated in January 2007 and began trading in January 2009. Directline supplied catering equipment as part of a group of companies.
In early 2013 Mrs Wilde, the sole director and shareholder in Directline decided to sell the business. On 1 March 2013 Christopher McDonnell was appointed as a director. On 1 April 2013 Mrs Wilde sold her shares to Mr McDonnell. Mrs Wilde stayed on to assist Mr McDonnell and resigned as a director of Directline on 31 May 2013, leaving Mr McDonnell as the sole director.
In October and November 2013 Directline purchased food (fresh and frozen meat), building equipment, stationery, computer equipment and some other non-food products on credit. The goods were delivered to warehouses employed by Directline and then removed by a number of different parties. Approximately £118,000 was paid to these suppliers but they were still owed £381,000.
In November 2013, six months after Mr McDonnell’s appointment, the company ceased trading. It was placed into Liquidation on 10 January 2014.
The Insolvency service investigation found that:
Mr McDonnell failed to ensure that Directline maintained or preserved sufficient accounting records or in the alternative, failed to deliver up to the Joint Liquidators such records as were maintained.
In the absence of sufficient accounting books and records it has not been possible to:
- ascertain the payers of and the reasons for receipts into the bank account of £893,972, and verify that they were for Directline’s business purposes
- ascertain the payees of and the reasons for payments made by the company totalling £713,587, and verify that they were for Directline’s business purposes
- confirm why Directline changed its business from the sale of catering and ancillary equipment to purchasing food (fresh and frozen meat), building equipment, stationery, computer equipment and some other non-food products that were delivered to warehouses employed by Directline
- establish what happened purchases totalling £499,140 - goods were delivered to warehouses employed by Directline and subsequently removed by a number of unidentified parties
- ascertain the reason for an apparent shortfall of sale proceeds or stock totalling at least £127,908
- ascertain Directline’s liability for VAT or whether it was entitled to a refund of VAT;
- establish the true position with regard to the assets and liabilities of Directline as at the date of Liquidation.
On Liquidation Directline UK Limited had no assets and estimated liabilities of £1,020,203.
Commenting on the disqualification, Cheryl Lambert, Chief Investigator at the Insolvency Service, said:
Directors have a duty to maintain and preserve adequate accounting records. They must also deliver these records up to a Liquidator if the company is placed into Liquidation. Directors who do not comply with this can expect to be investigated by the Insolvency Service and enforcement action taken to remove them from the market place.
Mr McDonnell has failed to keep records and as consequence a number of transactions cannot be explained and creditors have lost substantial amounts of money. Taking action against Mr McDonnell is a warning to directors to take their duties and obligations seriously.
Notes to editors
Directline UK Limited (CRO 06076095) was incorporated on 31 January 2007. Its registered office was Quebec House, Bury Road, Salford, Lancashire M3 7DU. It traded from the same address.
Directline UK Limited was placed into Liquidation on 10 January 2014.
Christopher McDonnell is of 100A Victoria Square, Manchester M4 5EA. His date of birth is 17 December 1954.
The Secretary of State accepted an undertaking from Christopher McDonnell on 20 November 2015. The disqualification commences on 11 December 2015.
A disqualification order or undertaking 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
In addition that person cannot act as an insolvency practitioner and there are many other restrictions are placed on disqualified directors by other regulations. Further information on director disqualifications and restrictions is available.
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.
All public enquiries concerning the affairs of the company should be made to: Cheryl Lambert, Head of Outsourced Investigations, Investigations and Enforcement Services, The Insolvency Service, 3rd Floor, Abbey Orchard Street, London SW1P 2HT. Tel: 0207 596 6117. Email: Cheryl.Lambert@insolvency.gsi.gov.uk.
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Published: 9 December 2015
From: The Insolvency Service