Javed-Yacub Fozdar and Riyaz Dawood Fozdar of Pound Empire Ltd have been disqualified as directors for 10 years each after failing to provide up to date accounts and financial records.
The Insolvency Service found the business (with stores in Manchester, Liverpool, Warrington and Stockport) to have insufficient records of PAYE, income, expenditure and directors' drawings.
The investigation also discovered there had been a transaction of the company's assets between the company and Javed Fozdar's wife on the day it stopped trading, which the directors claimed to be a debt repayment. However there is no evidence to show this was the case.
By transferring the assets, insolvency procedures were breached and creditors were unable to have access to these assets. The holders of retention of time could also not claim their goods.
Robert Clarke from the Insolvency Service said, "Directors have a duty to ensure that their companies maintain proper accounting records, and following insolvency, deliver them to the office-holder in the interests of fairness and transparency."
"Without a full account of transactions it is impossible to determine whether a director has discharged his duties properly, or is using a lack of documentation as a cloak for impropriety."
"The transfer of all the assets of the company to a connected party is a clear breach of the duties directors owe their creditors."
It is always important that directors know their duties when managing a company, especially when the company is struggling financially or is insolvent. Directors' actions leading up to and during the insolvency will be looked at closely by insolvency practitioners to ensure everything is above board. Directors must act to maximise creditors' best interests and be aware of the company's financial position at all times, otherwise there is the risk of disqualification.
If you think your company is insolvent, call us on 0800 9700539 and we can talk you through your options and explain what you can and can't do going forward.