Second testing company director disqualified for multiple failures
Michael John Devlin, a director of Nationwide Electrical Safety Ltd (NES), which traded as a portable appliance tester in Leeds, has become the second director of the company to be disqualified from acting as a company director for causing the company to enter into transactions that were detrimental to creditors.
A co-director, Matthew Paul Adamson (38), who also caused the company to enter into transaction that were detrimental to creditors and failed to keep proper books and records, was disqualified for 8 years from January 2014.
Mr Devlin (39) is disqualified from being a director in the same the terms from 5 January 2015 until 2020.
Following an investigation by the Insolvency Service, Mr Adamson (42) gave an undertaking to the Secretary of State for Business, Innovation & Skills in which he did not dispute that he failed to ensure the company preserved or delivered up adequate accounting records. In addition, Mr Adamson and Mr Devlin (38) both accepted in their undertakings that they had breached the terms of the CVA and entered into transactions to the detriment of NES’ creditors and from which they had ultimately benefitted.
The Insolvency Service was unable to establish and verify the purpose of combined payments from NES’ bank account totalling £572,511 made to three companies connected to both directors, and payments totalling £414,952 paid either directly to both directors or containing the reference ‘Directors’. From these payments sums totalling at least £582,752 were paid from NES’ bank account in the three months leading to its Liquidation and after it had ceased making payments to HMRC in accordance with the terms of the CVA.
Commenting on the disqualifications, Robert Clarke, Head of Insolvent Investigations North at the Insolvency Service, said:
Directors have a duty to ensure that their companies maintain proper accounting records, and, following insolvency, deliver them to the office-holder in the interests of fairness and transparency. Without a full account of transactions it is impossible to determine whether a director has discharged his duties properly, or is using a lack of documentation as a cloak for impropriety.
Furthermore directors must act in the interests of creditors and in transferring these funds to connected companies at a time other creditors were outstanding they have breached the duties directors must adhere to if they wish to retain the benefit of limited liability.
These directors have paid the price for failing to do that, as they cannot now carry on in business other than at their own risk.
Notes to editors
Nationwide Electrical Safety Ltd (CRO No. 06590898) was incorporated on 13 May 2008.
Matthew Paul Adamson is of Leeds and his date of birth is 29 June 1976. Mr Adamson’s disqualification from 6 January 2014 means he cannot promote, manage, or be a director of a limited company until 2022.
Michael John Devlin is of Leeds and his date of birth is 6 February 1976.
The company entered into a Company Voluntary Arrangement, which was approved with modifications by the requisite majority of its creditors at an adjourned meeting held on 20 April 2010. The Statement of Affairs attached to the CVA proposals and signed by Mr Adamson records the company’s liabilities as £711,643, of which HM Revenue and Customs were owed £523,269 in respect of unpaid PAY/NIC and VAT. Mr Adamson was also a creditor for £138,281 being the balance on his director’s loan account.
The company entered Creditors Voluntary Liquidation on 03 August 2011 following the failure of the CVA with assets of £2,621 and liabilities of £1,083,977. Mr Matthew Paul Adamson (DOB: 29 June 1972) of Leeds and Michael John Devlin (DOB: 06 February 1976) of Leeds were the registered directors from 13 May 2008 until the date of the Liquidation.
The disqualification undertaking for Mr Matthew Paul Adamson was accepted by the Secretary of State on 16 December 2013 and came into force on 6 January 2014.
The disqualification undertaking for Mr Michael John Devlin was accepted by the Secretary of State on 15 December 2014 and came into force on 5 January 2015.
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 can be found here.
Published: 19 February 2015
From: The Insolvency Service