Bankrupt jailed over shadow director role

A bankrupt from Altrincham who continued to run an interior design company despite being banned has been jailed for six months after an Insolvency Service investigation found he was acting as a shadow director

Michael McVey appeared at Manchester Crown Court charged with one count of managing a company while bankrupt. The court also handed down a director disqualification order prohibiting him from managing any company for a period of four years, unless he is granted permission by a court.

The court heard that in February 2015, McVey set-up a company called One Design & Build Ltd. With offices registered in Manchester, the company provided interior design, manufacture and project management services.

In June 2015 McVey was made bankrupt, after he had made himself financially liable for a debt he owed to a creditor of a separate business of which he was a director, and which had failed.

McVey officially resigned as a director of One Design & Build two days after being made bankrupt. However, when the company entered into voluntary liquidation in April 2016, it became apparent that he had been acting as a shadow director.

Evidence submitted to the court showed McVey dealing with third parties around issues of payment for services carried out on behalf of One Design & Build.

The court also considered salary payments within the company, where McVey’s was the highest salary and he was paid more than the sole official director.

In court, McVey claimed he had acted under the direction of the sole director of One Design & Build. He also stated he did not believe that what he was doing breached the terms of his prohibition.

The court, however, agreed with the prosecution that Michael McVey was fully aware of his actions and had deliberately breached the terms of his disqualification.

McVey has since made an application for permission to appeal his sentence.

John Fitzsimmons, chief investigator for the Insolvency Service, said: ‘Throughout the proceedings, Michael McVey laid the blame at someone else’s door but thankfully the courts recognised that he was fully aware that he was running the company contrary to his bankruptcy restrictions.

‘Running a company while banned is a criminal offence and this prosecution demonstrates that we will investigate those who think they can circumvent the law for their own purposes.’

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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