Directors of sofa manufacturer banned after breach of bankruptcy regulations
Martin Muldowney (“Mr Muldowney”), and Roger John Hallas (“Mr Hallas”), directors of Oldham-based CFS Furniture Ltd (“CFS”), which went into liquidation in January 2012, owing more than £1m to creditors, have been disqualified for a total of 16 years; Mr Muldowney, for acting as a director while an undischarged bankrupt and Mr Hallas for allowing him to do so.
The disqualifications follow an investigation by the Insolvency Service.
The Secretary of State for Business, Innovation & Skills has accepted undertakings from both men, banning them from acting as a company director or from managing or in any way controlling a company for the duration of their bans:
- Mr Muldowney, of Littleborogh, Oldham, for 11 years from 24 April until 2025, and.
- Mr Hallas, 63, from Disley, for five years from 11 December 2013
Commenting on the disqualifications, Robert Clarke, Head of Insolvent Investigations North at the Insolvency Service, said:
The bankruptcy restrictions provided for by legislation are there to protect the public and ensure that trading partners can deal confidently with the registered directors of a company. Those who knowingly breach such provisions do so at significant risk and will be rigorously pursued by the Insolvency Service.
In this particular case, not only did the directors of CFS act in a less than transparent manner, but their actions caused considerable losses to be suffered by a trade partner who, after already paying for orders, had to refund their customers for purchases which were never delivered. Those losses, and the losses of other parties, were then compounded by the unfair distribution of the company’s cash and other assets, favouring a connected company in a manner entirely unacceptable.
Mr Muldowney and Mr Hallas have paid the price for their conduct, and cannot now carry on in business other than at their own risk for lengthy periods of time.
Investigators found that Mr Muldowney, 49, who formally resigned as a director of CFS on 2 February 2011 after being made bankrupt, breached the restrictions placed on him by continuing to act as a director of the company between May 2011 and January 2012.
In addition to breaching the terms of his bankruptcy, Mr Muldowney did not dispute that CFS received payments totalling £162,752 to which it was not entitled from a ‘daily deals’ website company and also transferred cash and assets totalling more than £150,000 to a supplier company of which his wife was the sole director when other creditors went unpaid.
Notes to Editors
Mr Muldowney’s date of birth is 9 February 1965. The Secretary of State accepted a disqualification undertaking from Mr Muldowney on 03 April 2014, which commences on 24 April 2014, ending on 23 April 2025.
Mr Muldowney was registered with Companies House as a director of CFS between 28 July 2010 and 02 February 2011. He was adjudged bankrupt on 01 February 2011, and discharged on 31 January 2012. Mr Muldowney did not obtain the leave of the court to act as a director during the period of his bankruptcy.
Mr Hallas’ date of birth is 22 January 1951. The Secretary of State accepted a disqualification undertaking from Mr Hallas on 20 November 2013, which commenced on 11 December 2013, ending on 10 December 2018.
Mr Hallas was registered with Companies House as a director of CFS on 24 February 2011. Mr Hallas resigned as a director of CFS on 31 October 2011, but was re-appointed on 23 November 2011.
CFS was incorporated on 9 February 2010. The company’s registered office and trading address was at Laurel House, Laurel Trading Estate, Higginshaw Lane, Royton, Oldham OL2 6LH.
When CFS went into Liquidation on 27 January 2012, the company disclosed assets totalling £57,500 and liabilities to creditors of £970,688, resulting in a deficiency to creditors of £913,188.
The updated position, notified to the Joint Liquidators or The Insolvency Service, is realisations of £9,270 and liabilities of £1,048,642, resulting in a deficiency to creditors of £1,039,372.
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;
- act as an insolvency practitioner; or
- be a receiver of a company’s property.
- In addition 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 can be found at http://www.bis.gov.uk/insolvency/Companies/insolvent-companies/director-disqualification-and-other-action
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 from: http://www.bis.gov.uk/insolvency.
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Published: 9 May 2014
From: The Insolvency Service