Seven-year additional restriction for boss over £500k diversion
4 Jun 2019
A textiles boss who diverted over £500,000 of company funds for his own benefit has been given seven years of additional bankruptcy restrictions following an Insolvency Service intervention following a legal challenge by the main shareholder of one of the companies involved
4 Jun 2019
Rostum Nagra, who is from Nottinghamshire, was previously the director of two companies involved in textiles production.
However, between November 2014 and July 2015 he abused his position when he accessed more than £565,000 from the first company before diverting the funds to a second textiles company, called Rocco Fashion Ltd, of which he was the sole director.
Nagra then attempted to wind up the first company, claiming that it was no longer profitable. However, he did not fully disclose his intentions to shareholders and transferred all ongoing business to Rocco Fashion.
The main shareholder was alerted and after examining the company’s records, discovered Nagra transferred assets to the second company.
Proceedings were then brought to rescue the funds and in April 2018, the High Court in Birmingham found the former textiles boss had breached his duties as director of the first company.
This was followed by a further hearing in June 2018, where Nagra was ordered by the courts to compensate shareholders to the value of £565,860 including legal costs.
But the former textiles boss failed to pay the money owed and this led to the main shareholder applying to the court to have him made subject to a bankruptcy order, which was granted in July 2018.
To prevent Nagra from posing any further financial risks to his existing and future creditors, the Insolvency Service applied for additional years of bankruptcy restrictions to be placed upon him, which means he has a further seven years’ extension.
Gerard O’Hare, official receiver, said: ‘Not only did Rostum Nagra take a substantial amount of money from the company he was a director of but his actions were deliberately planned and sustained over a number of months, demonstrating that he had scant regard for his main shareholder.
‘Seven years of extended bankruptcy restrictions is a significant amount of time and seriously curtails Rostum Nagra’s ability to run a company and secure credit. This should serve as a warning to others that being a director is a position of responsibility and should not be abused by improper business practices.’