David Marsh, the Finance Director of Euromix Concrete Limited, has been disqualified for 8 years for abuse of an Invoice Discounting Facility at the risk and detriment of the funders and ultimately, the general body of creditors.
The disqualification, from 20 November 2015, prevents Mr Marsh from directly or indirectly becoming involved in the promotion, formation or management of a company for the duration of the term.
The funders of the Invoice Discounting Agreement became aware of discrepancies during an audit in March 2013. It then became apparent that Mr Marsh had claimed funds for non-existent invoices and claimed to have made payments to the Invoice discounters when no cheques were actually banked or were banked at a later date. This was hidden by a series of intercompany fund movements and the use of concealed bank accounts. As a result, Euromix obtained increased factoring funding and cash flow and built up a deficiency to the factors of approximately 500,000
Following the discovery Mr Marsh was removed from Euromix and an interim finance director was appointed who continued trade up to the date of Administration to mitigate the funders losses and provide the best return for creditors.
Both the factor and bank were protected by fixed and floating charges on all the assets of the company and thus were paid in full in respect of their liabilities. This caused any deficiency on the factoring account or overdraft on the bank account to be passed to the general body of creditors, in that the overall amount available for distribution after charges had been satisfied was reduced by the deficiency in the factoring account caused by his actions.
Rob Clarke ,Group Leader of Insolvent Investigations North , part of the Insolvency Service, said:
This disqualification should demonstrate to company directors that the Insolvency Service will investigate all forms of misconduct, no matter how complicated the evidence and that we will act to disqualify. This was a complicated and well concealed fraud where the Insolvency Service worked closely with the Insolvency Practitioner to identify and evidence exactly what had happened and the scale of the fraud .
In this case, Mr Marsh was aware that his actions were breaching the invoice discounting agreement and that his actions were to the risk of the funders and ultimately the general body of creditors.