Peter John Marshall, the director of Network Publishing Ltd (Network), was disqualified for eight years by Luton County Court, for the companys failure to remit over 265,000 collected on behalf of the States of Jersey and allowing it to incur debts of nearly 200,000 to suppliers whilst insolvent.
The ban, which started on 30 September 2013 follows an investigation by the Insolvency Service and means Mr Marshall cannot promote, manage or be a director of a limited company until October 2021 without leave of the court.
The court heard that at a time when Network was insolvent, it failed to pass over advertising revenues of 265,000 to the States of Jersey its principal customer, and incurred debts of nearly 200,000 to three print suppliers upon whom it relied to continue trading.
These creditors were identified as receiving detrimental treatment because in the same period, Network made payments from its bank account of 1.3million, including payments to some other trade creditors of 658,000. The court also heard that in this same period, the companys bank statements showed Mr Marshall personally benefitted from payments of at least 80,459.
According to Networks own records, a directors loan account for the same period, which showed an opening balance at 1 January 2010 of 110,338 due from Mr Marshall, was subsequently adjusted in January 2010 by a credit of 172,967 which was explained as a bonus of 130,000 and reclassification of expenditure.
Mr Marshall was not present at his disqualification, having previously applied for an adjournment stating he was going to be out the country. However, this application was dismissed because of previous adjournments and because the court believed he had been given sufficient notice to rearrange his affairs to ensure his availability on the day of sentencing..
Mr Marshall did not submit a formal defence but, amongst other matters, attributed the companys failure to his inability to fully attend to its affairs, having been diagnosed with cancer in August 2010. Mr Marshalls illness was accepted as mitigation by both the Official Receiver and the court and was taken into account when fixing the period of disqualification.
At the hearing, the court was satisfied that the Official Receivers evidence showed Mr Marshall was responsible for the following:
Contrary to a contractual obligation with the States of Jersey, Network Publishing failed to pay over advertising revenues totalling 265,000 for its 2009/10 holiday brochures, despite collecting the money on behalf of States of Jersey between October 2009 and March 2010. The company had then used the funds in the ordinary course of business. One payment for 84,380 was made to the States of Jersey customer but the cheque bounced; and
On 1 October 2009, Network changed from the original company that supplied its printing services, and to which it owed 184,101, to another print supplier who provided Network Publishing with a 100,000 credit facility. This facility was used towards reducing the original print suppliers liability to 84,000 without the knowledge or consent of the management of the new supplier. Network then incurred additional liabilities to the new supplier of approximately 35,000 resulting in a total debt to this supplier of nearly 135,000, still remaining at the date of the liquidation.
With over 200,000 owing to the two print suppliers, Network opened a third print account with another supplier in May 2010. Only one invoice was paid from this account, with 10 invoices totalling 27,214 remaining unpaid.
Additionally, Network owed a further 29,504 to this print supplier for work completed on behalf of another of Mr Marshalls companies, resulting in a total liability of 58,718 to this new supplier at the date of the liquidation.
It was also proven to the courts satisfaction that Mr Marshall had inflated the companys balance sheet by creating an unrealistic goodwill figure which stood at 391,000 in the December 2009 year-end accounts and which the court agreed did not follow acceptable accounting procedures.
Further, when the bank called in Mr Marshalls personal guarantee of 150,000 after the winding up order, he sought to use this as mitigation, describing it as a loan he had made to the company.
Mr Marshall also suggested that the States of Jersey and the Official Receiver were somehow complicit in conspiring against him to seek to have him disqualified. The judge at the disqualification hearing described these claims as being Walter Mitty-esque in their absurdity.
Commenting on this case John Reilly, Deputy Official Receiver at St Albans, part of the Insolvency Service, said:
Throughout the proceedings Mr Marshall failed to take any responsibility for the companys failure and blamed it all on factors outside his control. Despite being an experienced company director, having held no less than 20 directorships, he was at best naive in his understanding of his responsibilities as a director as well as basic company accounting.