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Legislation & Litigation

Second testing company director disqualified for multiple failures

By CreditMan Monday, February 23, 2015

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.

Nationwide Electrical Safety Ltd (CRO No. 06590898) was incorporated on 13 May 2008.