Directors disqualified for paying themselves instead of creditors

Two directors have been disqualified for five years for taking a total of £59,000 from company funds instead of paying creditors after their business got into financial difficulties.

Neither director disputed that they took the money at a time when the company’s tax liabilities had risen to more than £109,000 and when a trade creditor had obtained a court judgment against them for over £16,000.

They have both given undertakings not to act as company directors for five years. Vicky Bagnall, Director of Investigation and Enforcement Services at The Insolvency Service, said: “The Insolvency Service will rigorously pursue company directors who seek to benefit themselves ahead of their creditors by extracting company funds when others are not being paid.

”Fair treatment of creditors is essential for business confidence, which is, in turn, essential for economic growth.

“The protection of limited liability should only be available to those who comply with their obligations as company directors. If those obligations are ignored, that protection will be withdrawn.”

Please contact Charles Goodbody in our Warminster office on 01985 214444 or Chris Jolly in Westbury on 01373 865577 or email cgoodbody@mulaw.co.uk or cjolly@mulaw.co.uk if you would like more information about the issues raised in this article.