Director disqualification for manufacturer who abused loan agreements banner


Home / Blog / Director disqualification for manufacturer who abused loan agreements

Director disqualification for manufacturer who abused loan agreements

Director disqualification for manufacturer who abused loan agreements

A director of a manufacturing company has been banned from acting as a company director for 8 years after having been found to have wrongly diverted more than half a million pounds of business finance.

The individual concerned was a director of a company supplying products for the construction industry. He was found to have diverted over £510,000 of customer funds into the company bank account which should have been repaid to a finance company the business used to secure funds in advance for customer orders.

The issue arose over a practice the business used of submitting invoices to an external finance company to secure funds in advance on customer orders. Invoices sent to customers were meant to contain the details of the finance company, so when customers paid the invoice, the funds would go to the finance company, repaying the advance funds lent to the company. This process is known as 'factoring' and is a widely used and legitimate business practice.

However, instead of making sure customer payments went to the finance company, the director concerned sent customers invoices with the company's bank details, so the funds that should have gone to the finance company went to his business instead.

This wrongdoing was uncovered after his company went into administration owing the finance company over £500,000 (in additional to owing £1.3million to other creditors). At this point, the finance company contacted customers to collect the outstanding funds, only to discover customers had already paid their invoices to the company.

Following an investigation by the Insolvency Service that showed the extent of the directors' wrongdoing, he chose not to dispute that he had "misused factoring facilities by diverting customer funds away from its invoice finance provider". As a result, in January of this year, the Secretary of State accepted an undertaking from the director, disqualifying him from being a company director for 8 years.

Martin Gitner, Deputy Head of Insolvent Investigations at the Insolvency Service, said:

"This lengthy ban shows we take these matters very seriously and will seek to disqualify those who choose to act unscrupulously."

Get immediate advice and representation from our team

At Wells Burcombe, we have extensive experience in defence of company directors, including in relation to director disqualification.

We also have specialist expertise in white collar crime defence. As such, if you are concerned about potential criminal proceedings, we can offer clear guidance on your legal position and exactly what you need to do, say and not say in order to best protect yourself.

We can be there from your first contact with the authorities, representing you during interviews, investigations and at court. Our team has a strong track record of helping our clients to avoid criminal prosecution, frequently managing to have investigations dropped or to negotiate the minimum legal penalties where an offence has occurred.

So, if you need immediate advice and representation for a potential director disqualification or white-collar crime issue, get in touch with our experts now.

Contact us today in West Drayton on 01895 449288, in St. Albans on 01727 840900 or send us an email.

    Get in touch

    This site is protected by reCAPTCHA. The Google Privacy Policy and Terms of Service apply.