Christopher McDonnell has been disqualified from acting as a director for 9 years for failing to maintain, preserve and deliver up accounting records after a company was placed into Liquidation. Mr McDonnells disqualification follows an investigation by the Insolvency Service.
Directline UK Limited was incorporated in January 2007 and began trading in January 2009. Directline supplied catering equipment as part of a group of companies.
In early 2013 Mrs Wilde, the sole director and shareholder in Directline decided to sell the business. On 1 March 2013 Christopher McDonnell was appointed as a director. On 1 April 2013 Mrs Wilde sold her shares to Mr McDonnell. Mrs Wilde stayed on to assist Mr McDonnell and resigned as a director of Directline on 31 May 2013, leaving Mr McDonnell as the sole director.
In October and November 2013 Directline purchased food (fresh and frozen meat), building equipment, stationary, computer equipment and some other non-food products on credit. The goods were delivered to warehouses employed by Directline and then removed by a number of different parties. Approximately 118,000 was paid to these suppliers but they were still owed 381,000.
In November 2013, six months after Mr McDonnells appointment, the company ceased trading. It was placed into Liquidation on 10 January 2014.
The Insolvency service investigation found that:
Mr McDonnell failed to ensure that Directline maintained or preserved sufficient accounting records or in the alternative, failed to deliver up to the Joint Liquidators such records as were maintained.
In the absence of sufficient accounting books and records it has not been possible to:
ascertain the payers of and the reasons for receipts into the bank account of 893,972, and verify that they were for Directlines business purposes
ascertain the payees of and the reasons for payments made by the company totalling 713,587, and verify that they were for Directlines business purposes
confirm why Directline changed its business from the sale of catering and ancillary equipment to purchasing food (fresh and frozen meat), building equipment, stationary, computer equipment and some other non-food products that were delivered to warehouses employed by Directline
establish what happened purchases totalling 499,140 - goods were delivered to warehouses employed by Directline and subsequently removed by a number of unidentified parties
ascertain the reason for an apparent shortfall of sale proceeds or stock totalling at least 127,908
ascertain Directlines liability for VAT or whether it was entitled to a refund of VAT;
establish the true position with regard to the assets and liabilities of Directline as at the date of Liquidation.
On Liquidation Directline UK Limited had no assets and estimated liabilities of 1,020,203.
Commenting on the disqualification, Cheryl Lambert, Chief Investigator at the Insolvency Service, said:
Directors have a duty to maintain and preserve adequate accounting records. They must also deliver these records up to a Liquidator if the company is placed into Liquidation. Directors who do not comply with this can expect to be investigated by the Insolvency Service and enforcement action taken to remove them from the market place.
Mr McDonnell has failed to keep records and as consequence a number of transactions cannot be explained and creditors have lost substantial amounts of money. Taking action against Mr McDonnell is a warning to directors to take their duties and obligations seriously.