Two disqualified directors, Mark Brafman and Bulbinder Singh Sandhu, were sentenced to a combined 13 months in prison, and disqualified for a further 12 years each, for being in control of a company while banned from doing so.
Their convictions – handed down on 16 October during a hearing at Southwark Crown Court – follow an initial investigation by the Insolvency Service and a criminal investigation and prosecution by the Department for Business Innovation and Skills (BIS).
Mr Brafman was sentenced to 8 months in prison after pleading guilty to acting as a director of 3 companies whilst disqualified and of a fourth whilst an undischarged bankrupt.
Mr Singh Sandhu pleaded guilty to acting as a director of 2 of the companies whilst disqualified and was sentenced to 5 months imprisonment. Both defendants were further disqualified from acting as directors of a limited company for 12 years each from 16 October 2014.
Mark Brafman was initially disqualified from acting as a director in October 2001 for 7 years while Mr Singh was banned in July 2003 for 8 years.
Despite his disqualification between July 2005 and January 2008, Mr Brafman acted as a director of Atlantic Fashions Limited, a retail business trading in womens fashion clothing.
On 8 January 2008 Mr Brafman and Mr Singh Sandhu incorporated Acton Farm Ltd, in breach of their disqualifications, and ran the company whilst 2 of their employees were registered as directors.
On 21 January 2008 Atlantic Fashions limited entered a pre-pack administration and its goodwill and assets were sold to Acton Farm Ltd free of debts and liabilities for 337,487. At the date of administration, the Atlantics unsecured debts totalled 5.77 million.
Acton Farm Ltd also traded in womens clothing but by May 2008 the company had built up significant rent arrears on its shops. By 26 November 2008 all of Acton Farms shops had closed and the company went into liquidation the following month with 1.63 million owing to creditors.
In May 2008 Mr Brafman and Mr Singh Sandhu formed another company, Jet Star Retail Ltd which purchased the assets from Northworld Ltd trading as Mark One, another womens fashion retailer. As before, they ran this company together until October 2008 when Mr Brafman left, leaving Mr Singh Sandhu in sole charge.
A month later on 19 November 2008, Jet Star Ltd went into administration with an estimated 9.775 million owing to creditors. On 18 October 2008 Mr Brafmans disqualification had come to an end. Following his departure from Jet Star Retail Ltd he incorporated another company, Primary Colours Ltd in January 2009. This company sold womens fashion from three separate sites across London. On 25 June 2009 Mr Brafman was made bankrupt, which automatically disqualified him from acting as a director of a limited company. As before he ignored this restriction and continued to run Primary Colours Ltd. It was wound up on 10 February 2010 following a creditors petition owing 289,432 to creditors.
Mark Brafman was sentenced to 8 months imprisonment on all 4 offences to run concurrently.
Bulbinder Singh Sandhu was sentenced 5 months imprisonment on both offences to run concurrently.
Confiscation proceedings have been started by BIS against both defendants.
Deputy Chief Investigation Officer Liam Mannall from the Department for Business Innovation and Skills said;-
Mr Brafman and Mr Sandhu were both experienced businessmen who were clearly aware of the responsibilities involved in directing companies. Both had been disqualified from doing so, yet over a number of years Mr Brafman chose to ignore the restrictions placed on him, as did Mr Sandhu for a lesser period.
BIS conducted a lengthy and thorough investigation to gather the evidence to put them before the criminal courts. This case should serve as a warning to anyone flouting the law governing the running of companies: you will risk investigation, prosecution, a criminal conviction, and imprisonment.