Creditors entitled to receive £500,000 following Compensation Order in landmark case
The Courts have ordered a disqualified wine merchant to pay back more than £500,000 to creditors in a landmark case for the Insolvency Service – which may set a precedent for future claims.
The owner of Noble Vintners Limited, Kevin William Eagling, has been disqualified as a director for the maximum period of 15-years and ordered to pay back £559,484 to the creditors of the company by Judge Prentis.
The Court heard how Eagling abused customers’ trust and removed funds, of which a large part was due to be paid to customers after selling their wine stocks or not fulfilling their orders.
The 57-year-old, who now lives in Northern Cyprus, was told that creditors were entitled to receive the money, which was why the Insolvency Service made its first ever Compensation Order application against a disqualified director.
Noble Vintners traded as a wine broker since June 2011. Its goal was to help clients acquire stocks of valuable wines for investment purposes.
Kevin Eagling became a director of the company in May 2015. However, just two years later Noble Vintners entered a creditors’ voluntary liquidation (CVL) with a deficiency of around £1.6 million.
In light of this, a liquidator was appointed to wind-up the company’s affairs before reporting to the Insolvency Service.
However, investigators uncovered transactions that indicated that Eagling authorised company funds worth £559,484 to be transferred to a second company, between November 2015 and October 2016, of which he was also a sole director and shareholder.
Eagling did not explain the legitimacy of the transaction and the Insolvency Service is now forcing Eagling to make payments via the Order.
The power to issue Compensation Orders was granted to the Insolvency Service in 2015. To use the power, the Insolvency Service has to demonstrate that misconduct had taken place after the introduction of the legislation and after the company entered into insolvency proceedings.
Until the introduction of this legislation, the insolvency office holder has the option to take action for recovery against directors for their actions and debts due to the company.
However, where the liquidator does not do so, and there is a clearly identifiable amount lost to creditors through the actions of a director who is then disqualified, this additional power helps seek redress for those who have lost out.
David Brooks, Chief Investigator for the Insolvency Service, said: “Kevin Eagling, abused his clients and creditors, denying them of hundreds of thousands of pounds. In passing down the compensation order, the judge noted that clients were hit particularly hard as they thought they would benefit from their investments, which ultimately came to nothing.
This case illustrates that compensation orders can be a valuable tool for the Secretary of State in seeking recompense for creditors to supplement the recovery actions available to office-holders who have been unable to take recovery action within the insolvency regime.”