Brothers banned from being directors after breaching legal duty
Two brothers have been banned from being company directors after they breached their duty to creditors when their business went into liquidation.
The two men ran a company that provided payroll services. The business got into financial difficulties and was wound up in October 2012.
An Insolvency Service investigation found that two weeks after the winding up, the company received two payments from customers totalling more than £900,000. This money was transferred to another business associated with the brothers, even though the company in liquidation owed nearly £11m to creditors.
Following the investigation, one brother was disqualified from acting as a director for nine years and the other was disqualified for eight years.
Robert Clarke, Group Leader - Insolvent Investigations North, said: “Directors who put the financial interests of connected parties above those of third party creditors damage confidence in doing business and are corrosive to the health of the local economy.
“This ban should serve as a warning to other directors tempted to help themselves first; you have a duty to your creditors and if you neglect this duty you could be investigated by the Insolvency Service.”
Please contact Neil O'Callaghan if you would like more information about the issues raised in this article or any aspect of company law.