Court orders disqualification for director who failed to keep adequate records and could not account for stock
Ian Stanley Morton, the Director of One Source UK Limited, has been disqualified as a director for 8 years after the County Court at Warrington made an order against him for failing to ensure that accounting records sufficient to fully explain the stock transactions of the company were maintained, preserved, and/or delivered up to the Liquidator.
The order, made on 16 November 2015, is effective from 7 December 2015.
There relevant period for which records are not available is 1 November 2012 to the date of the company’s liquidation, 21 March 2013.
The available accounting records of the company showed that, during the period, stock with a value of £143,039 was delivered to the company, whilst the company’s bank statements recorded trading income over the same period of £71,174.
A number of creditors had claimed Retention of Title on the stock supplied to the company, with a value of £79,563, however, Mr Morton failed to co-operate with the Liquidator in assisting these creditors in recovering such stock from the company, and has also failed to provide explanations as to how the stock was disposed of, or accounted for the income generated from any sales of such stock or whether it was sold at a fair market value.
One of the main purposes of retention of title clauses are to ensure that where goods are supplied on credit, if the buyer subsequently goes into liquidation, the seller can repossess the goods.
Mr Morton also failed to explain why the company ordered stock with a value of £37,998 which did not appear to be in the normal course of business, or why such stock was not present at the company’s trading premises at the date of Liquidation.
Commenting on the disqualification, Robert Clarke, Head of Company Investigations at the Insolvency Service, said:
Keeping proper records is a pivotal duty for directors and there is no place in the business environment for those who neglect their responsibilities in this area and thereby cover up the activities of the companies they manage.
The lack of records in this case made it impossible to determine the movement of stock and whether there was other, more serious, misconduct at One Source and that is reflected in the lengthy period of disqualification.
Notes to editors
Mr Morton’s date of birth is 9 April 1982 and he resides in Widnes, Cheshire.
One Source UK Limited (CRO No. 06611450) was incorporated on 4 June 2008 and its registered office was Brosley House, Widnes Road, Widnes, Cheshire, WA8 6AH
Mr Morton was the sole director of One Source UK Limited from 26 October 2012 until the Company ceased trading. The Company went into Liquidation on 21 March 2013 with an estimated deficiency of £190,810.
The matters of unfitness were that: Mr Morton failed to ensure that accounting records sufficient to fully explain the stock transactions of the company in the period from 01 November 2012 to the date of its Liquidation on 21 March 2013, were maintained and/or preserved, or in the alternative, delivered up to the Liquidator.
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
In addition that person cannot act as an insolvency practitioner and there are many other restrictions are placed on disqualified directors by other regulations.
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings. 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.
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Published: 22 December 2015
From: The Insolvency Service