Director of insolvent company disqualified and ordered to pay fines for non-compliance

Blog Insolvency

The boss of an insolvent company has faced further penalties after failing to explain a number of withdrawals and bank transfers.

The case relates to the liquidation of Smith Waste and Recycling (SWR), which was placed into Creditors Voluntary Liquidation in November 2014.

After several failed attempts to secure adequate accounting records, the Insolvency Service was called in to investigate the company and its director further.

The regulator said the director was unable to explain the whereabouts of funds from SWR’s accounts totalling more than £517,000.

It found that between September 2013 and September 2014, SWR made a number of unexplained cash withdrawals totalling just over £430,000. The investigators were also unable to explain more than £86,000 worth of transfers between January and October 2014 made to the accounts of two companies connected to the director.

The Insolvency Service said that, without adequate accounting records, it was unable to verify whether the transfers and withdrawals represented genuine business expenditures, as well as the director’s remuneration and what the company’s assets and liabilities were at liquidation.

For failing to provide this information, the waste management boss was handed a seven year disqualification from acting as a company director, as well as a 28-week suspended prison sentence, 250 hours of unpaid work and was ordered to pay prosecution costs totalling £8,901.

Arwel Jones, Director of Criminal Enforcement for the Insolvency Service, said: “Lee Smith’s behaviour throughout the liquidation has been highly unacceptable. Failing to deliver any form of company records means that his creditors are at risk of losing a significant amount of money.

“A seven year disqualification order handed down by the courts is a significant ban, which should serve as a deterrent to those directors who fail to conduct their business affairs in accordance with the law.”

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