Extended bankruptcy after boss caused £177K loss to finance company
A company director has had his bankruptcy restrictions extended for his role in causing a finance company to lose more than £177,000
8 Feb 2019
Terence Coventry, from Gainsborough, Lincolnshire, was appointed the sole director of Alliance Traffic Services Ltd in April 2016 before he caused the company to enter into a factoring agreement a month later.
The factoring agreement, which Coventry personally guaranteed, set out the terms where an independent finance company would buy Alliance Traffic Service’s invoices in return for advanced finances.
However, between May 2016 and March 2017, Coventry abused his position of trust as a director and caused of Alliance Traffic Service to breach the terms and conditions of the factoring agreement, despite being personally liable.
He failed to ensure company sales invoices were correctly produced and some customers paid money directly to Alliance Traffic Service’s bank account despite it being due to the factoring company. This resulted in the finance company losing more than £177,000.
Alliance Traffic Service entered into compulsory liquidation and was wound up in November 2017. With a substantial shortfall owed, the finance company made claims against guarantees Coventry was personally liable for and in January 2018, he was made bankrupt as he could not afford to pay the debt.
Bankruptcy restrictions, such as declaring bankrupt status when borrowing more than £500, typically last until the bankruptcy ends after twelve months. However, the Insolvency Service applied to have Coventry’s bankruptcy restrictions extended due to his abuse of trust and causing the finance company to lose thousands of pounds.
This led to Lincoln County Court making a bankruptcy restrictions order against Coventry, which means his restrictions last for seven years.
Coventry did not attend the hearing.
Gerard O’Hare, Official Receiver for the Insolvency Service, said: ‘Terence Coventry’s conduct in running his business fell well below the standards required of an individual in business and this led to his insolvency.
‘The seven-year restriction should help protect the business community and act as a warning to others not to act in this way.’
Report by Pat Sweet