Delinquent Directors

Two years ago, TMP dealt with the liquidation of a glass recycling company. A pre-liquidation sale of the business and assets to a newco had occurred prior to our appointment. The liquidation progressed smoothly and a distribution was made to all unsecured creditors within 8 months of our appointment. At about that time, the Environment Agency commenced criminal proceedings against two former directors and two former employees of the company.

The charges related to fraud and false representation over a 2 year period in which records of the amount of glass waste recycled were significantly overstated. This was done for the personal gain of the individuals involved – estimated to be £2.8m. The company was also named in this action – our intention as liquidators was to co-operate fully with the Agency but we had no obligation to become involved in the proceedings.

The eventual outcome, after a recent trial, was that both directors received 4 years imprisonment, and were disqualified as company directors for 10 years. Significant compensation orders were made against the two directors. Failure by the directors to pay these amounts in full, within 6 months of their convictions, could result in prison sentences being extended by a further 32 months.

The two former employees were given 2 year suspended prison sentences, fined and ordered to carry out 200 hours of unpaid work. A very small fine was imposed against the company in liquidation.

This serves as a warning to all companies, and their directors, that they need to operate legally – not least in order to create a level playing field and fair competition.

Posted in Uncategorized

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>