Alan James Proto, an accountant and director of GML Construction Limited (GML), has been disqualified from acting as a director for 12 years for creating false documentation and constructing a scheme to defraud the company’s creditors.
An investigation by the Insolvency Service found Mr Proto (48) created and backdated fictitious documents to try and legitimise assets transfers totalling over £1m at a time he knew the company was insolvent.
Mr Proto, a chartered accountant, who was Kent Entrepreneur of the Year in 2012, has given an undertaking to the Secretary of State for Business, Innovation and Skills, not to be a director of a company, or be involved in the management of a company in any way for 12 years from 29 December 2014. GML traded in the construction industry from 1991 to December 2012 and went into administration on 16 November 2013 and then into liquidation on 7 January 2014 with assets of £1,893,379 and liabilities of £4,463,599.
The Insolvency Service investigation showed that from December 2012, in anticipation of GML entering a formal insolvency process, Alan Proto created false documentation and constructed a scheme intending to put him in a better position and assets beyond the reach of creditors.
At December 2012, GML was owed approximately £898,000 from a subsidiary which was involved in the sale of a property development. It was expected that GML would receive repayment in part of full following the sale of the development by the subsidiary. Mr Proto created entries on a computer which purported to write off the outstanding debt due from the subsidiary and transferred the interest in the subsidiary for his benefit. He also created documents which purported to show other people agreeing to this at a time he had never met them or, in relation to companies, they did not exist. He then backdated any correspondence he did have to try and validate the scheme. Furthermore, Mr Proto entered into transactions whereby his loan to GML of £150,000 was repaid ahead of other creditors.
His scheme was exposed because he had written out his plot in a computer, and these notes were retrieved after they had been deleted.
Commenting on the disqualification, Cheryl Lambert, Head of Outsourced Investigations at the Insolvency Service said:
This is a very significant ban, reflecting the severity with which the Insolvency Service considers director conduct.
Directors of companies experiencing financial difficulties have a duty to act in the best interests of its creditors. This must include ensuring the transparency of the company’s trading activities. Mr. Proto’s conduct of GML’s affairs fell short of the judgment expected and to protect the integrity of the Market, the Insolvency Service will use its powers to protect the business world when director’s act in this way.
Notes to Editors
GML Construction Limited (CRO No. 02640560) was incorporated on 23 August 1991 and went into administration on 16/1/13 and Liquidation on 7/1/14.
Alan James Proto gave an undertaking on 29/10/14 to the Secretary of State not to be a director for 12 years. The disqualification commenced on 26 December 2014.
Mr Proto is of Chester and his date of birth is 8 February 1967. 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.
Published: 3 March 2015
From: The Insolvency Service