Directors banned over failure to put creditors first
23 Oct 2019
A family of directors from Bedfordshire have been banned for a total of 19 years after they took advantage of their creditors and owed over £50,000 to HMRC
23 Oct 2019
Husband and wife John Power and Helen Power were directors of Power Installations Ltd and Power Security Installations Ltd. They were later joined in the management of the companies by their son, Daniel Power, who was also a director.
Operating from premises in Barton le Clay, Bedfordshire, Power Installations Ltd was incorporated in June 1996, and Power Security Installations Ltd in January 2005.
The two companies supplied and installed electrical and security equipment across the residential, commercial and industrial sectors, principally within London and the home counties. But after experiencing trading difficulties, both entered into liquidation in January 2017.
A subsequent investigation by the Insolvency Service revealed that overdraft facilities were provided to Power Installations Ltd and Power Security Installations Ltd on a joint basis.
As security, the bank held joint and several personal guarantees, limited to £269,000, provided by John and Helen Power. These were further supported by a legal charge over their jointly-owned residential property.
However, in the period between discussing formal insolvency options with the eventual liquidator in October 2016 and the weeks leading up to the companies entering into liquidation in January 2017, the Powers caused the two companies to retain trading receipts of just over £320,000.
Retaining trading receipts reduced the overdraft borrowings which they had guaranteed, and while this personally benefited the Powers’, their other creditors remained unpaid and/or liabilities were permitted to increase.
More than £51,000 due to the tax authorities during the period remained unpaid and other money owed to creditors increased by more than £33,000 to at least £967,000.
John and Helen Power have each received seven-year bans, while their son accepted a five-year disqualification.
Rob Clarke, chief investigator for the Insolvency Service said: ‘The Power family put their own personal financial interests above those of creditors when the two companies were facing liquidation. Such actions not only damage business confidence but are also corrosive to the health of the local economy.
‘These bans should serve as a warning to other directors tempted to help themselves first, that you have a duty to your creditors and if you neglect this duty you could be banned for a significant period of time.’