Insolvency Services News
Boss of a specialist recruitment agency is banned from running companies after diverting ?60k from an insurance settlement into his personal bank account.
Dean Jacobs, 29 of Birmingham, was the sole director of L & H Construction Limited, a specialist recruitment company helping people in the mechanical and electrical industries find new work.
But after trading for a little over two and a half years, the business ran into difficulties and L & H Construction entered into administration on 4 January 2017 after HMRC presented a winding up petition for an outstanding tax bill. Upon administration, L & H Construction owed creditors close to ?800,000.
Insolvency practitioners were brought in to deal with the administration but Dean Jacobs failed to cooperate with their investigations.
Administrators were then made aware that L & H Construction was awarded an insurance settlement and when asked where the money had gone, Dean Jacobs could not provide any explanation of what he did with the funds.
Further investigations by the Insolvency Service found that despite being fully aware that L & H Construction had stopped trading and owed money to creditors, Dean Jacobs diverted ?60,000 from an insurance settlement straight into his personal bank account.
As a result, on 16 April 2018 the Secretary of State accepted a disqualification undertaking from Dean Jacobs. The ban became effective from 7 May 2018 and he is now banned from directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company for 10 years.
Susan MacLeod, Chief Investigator of Insolvent Investigations, Midlands & West at the Insolvency Service, said:
Dean Jacobs put his own interests ahead of the company?s creditors and the timing of the funds he took from the insurance settlement showed a cynical disregard to those creditors.
Directors who put their own personal financial interest above those of creditors damage business confidence. We will take action against directors who do not take their duties seriously and abuse their position and they will therefore lose the privilege of limited liability trading.
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The director of a Scottish freight transport firm has been banned from acting as a director for 9 years after he illegally used red diesel to fuel his fleet.
Scott McClung (47) was the sole director of SDS Logistics (Bonnybridge) Limited, a company registered as freight transport by road and based in Leslie Park, Denny, Stirlingshire.
After six years, however, the company ceased trading on 15 August 2016 when it was placed into liquidation, with an eventual deficiency to creditors of ?1,860,934.
An investigation by the Insolvency Service following the liquidation found that between May 2014 and April 2016, SDS Logistics misused close to 1.7 million litres (approximately 1,688,648 litres) of rebated Gasoil, otherwise known as red diesel, in their road vehicles.
Gasoil is a rebated fuel, dyed red, for identification purposes. It can be used in registered agricultural or construction vehicles, such as tractors, excavators, cranes and some other non-road applications such as boats, and carries a significantly reduced tax levy compared to Derv, the white diesel fuel used in ordinary road vehicles.
But it is illegal to use red diesel in vehicles registered for and used on public roads.
SDS Logistics? misuse of the fuel was first detected when HMRC officials visited SDS Logistics? premises in April 2016 and found four vehicles had been misusing red diesel.
HM Revenue & Customs levied an excise duty of ?790,456 and a penalty of ?553,210 but SDS Logistics failed to pay, leading to its liquidation.
On 13 February 2018, Mr McClung gave a disqualification undertaking to the Insolvency Service, which was accepted by the Secretary of State, on 21 February 2018. The disqualification is from 14 March 2018 and is effective until 14 March 2027.
Robert Clarke, Investigations Group Leader at the Insolvency Service, said:
The substantial period of this disqualification reflects the fact this director put his financial interests above all else in taking advantage of this subsidised fuel. The majority of similar businesses pay the proper duty on the fuel they use, and carry that legitimate cost within their trading strategy.
This was a blatant disregard by a director to obtain an unfair competitive advantage.
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