Lid lifted on crane hire director’s insolvent trading
Christopher John Etheridge, Director of D & R Pike Crane Hire Ltd (D & R) has been disqualified for 6 years for trading the company for 4 years at the risk, and to the ultimate expense, of creditors at a time that he was aware, or should have been, of its insolvency.
The Insolvency Service investigation found that by 1 October 2011, D & R was unable to pay its liabilities as and when they fell due and that it had liabilities of at least £77,036.
HM Revenue & Customs were owed at least £18,036 for VAT, Corporation Tax and NIC, with the the last payment towards VAT being made in January 2010;
At least 6 creditors were pressing for payment and a a County Court judgement for £3,933 was gained against the company on 14 September 2011.
It was also found there were 17 dishonoured cheques issued from D & R’s bank account totaling £8,161.17 and there were 21 rejected direct debits/standing orders totaling £6,770.74.
As a result of Mr Etheridge continuing to trade D & R, its liabilities increased from at least £77,036 as at 1 October 2011 to known liabilities of £103,175 as at liquidation.
The insolvent trading was aggravated in August 2013 when Mr Etheridge transferred D & R’s crane, its principle tangible asset and form of generating income and turnover, to an associated company for no, or less consideration, than its worth. At this time, D & R had liabilities of at least £95,549. The company then incurred a cost to hire back the asset, increasing its overheads and reducing any profit it may have made.
Commenting on the disqualification, Andrew Stanley, Official Receiver Chatham at The Insolvency Service, said:
There can be no doubt that Mr Etheridge was aware of D & R’s insolvency, nevertheless he chose to ignore this and expose unsuspecting creditors to the risk of continuing to trade for a further 4 years.
Whilst promising suppliers payments, he personally benefitted from the income of D & R and the protection that limited liability afforded him.
Limited liability is a privilege that should not be abused and directors should note that should they do so, the Insolvency Service will take appropriate action to remove them from the business community.
Notes to editors
Mr Etheridge’s date of birth is 26 October 1965. He resides in Maidstone, Kent.
D & R Pike Crane Hire Ltd (CRO No. 01317235) was incorporated on 16 June 1977 and latterly traded from Kent providing crane hire services.
Mr Etheridge was a director from 25 March 2008 to liquidation. The Company was subject to a winding up order on 19 January 2015 on a petition presented by HM Revenue and Customs. At liquidation it had an estimated deficiency of £135,733.
On 4 February 2016, the Secretary of State accepted a Disqualification Undertaking from Mr Etheridge, effective from 25 February 2016, for a period of 6 years. The matters of unfitness, which Mr Etheridge did not dispute in the Disqualification Undertaking, were that:
“I traded D & R Pike Crane Hire Limited (“D & R”) from at latest 1 October 2011 to 19 January 2015, at the risk, and to the ultimate expense, of creditors at a time that I was aware, or should have been aware, of its insolvency. In that by 1 October 2011:
- D & R was unable to pay its liabilities as and when they fell due
- it had liabilities totalling at least £77,036
- HM Revenue & Customs were owed at least £18,036 in respect of VAT, Corporation Tax and NIC
- the last payment towards VAT was made in January 2010
- at least 6 creditors were pressing for payment
- CCJ for £3,933 was gained against D & R on 14 September 2011
- there were 17 dishonoured cheques issued from D & R’s bank account totalling £8,161.17
- there were 21 rejected direct debits/standing orders totalling £6,770.74
- as a result of me continuing to trade D & R its liabilities increased from at least £77,036 as at 1 October 2011 to known liabilities of £103,175 as at liquidation.”
The insolvent trading was aggravated in August 2013 when I transferred D & R’s crane, its principle tangible asset and form of generating income and turnover, to an associated company for no, or less consideration, than it’s worth. At this time D & R had liabilities of at least £95,549. D & R then incurred a cost to hire the asset back, increasing its overheads and reducing any profit it may have made.
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: 21 March 2016
From: The Insolvency Service