A pub landlord couple who ran a number of pubs in the Yorkshire area have had the last orders called on their business. The couple were handed an eight year director disqualification after accounting failures caused inadequate books and records to be maintained. They will now not be able to pull another pint as a pub landlord until 2024.
Mr and Mrs Fountain acted as the directors of a pub management company from 10 February 2012 until 18 November 2013. At this point, the company entered into voluntary liquidation with an estimated deficiency of £213,081.
The liquidation report filed by the official receiver prompted an Insolvency Service investigation into the company’s dealings. During this investigation, the Insolvency Service could not account for some £900,000 of funds which had passed through the company’s account.
Where did all the money go?
Shaun and Deborah Fountain were the directors of a company that managed a number of pubs in the Bradford and Leeds area. When attempting to uncover the reason for the company’s substantial losses, the investigators found that inadequate company books and records were preserved and/or delivered up. This made it impossible to explain the cause of the company’s failure, or accurately detail the acquisition and disposal of its assets.
More specifically, the investigators were unable to explain why net funds of £689,300 were transferred to a related company. There were also a number of untraceable cheque payments and cash withdrawals totalling £18,744, along with additional unexplainable transactions totalling £15,214.
There was also no explanation why payments totalling £39,527 had been debited from the company’s account to pay for fixtures, fittings and franchise fees for the public houses. These are pubs that were in the sole names of Mr and Mrs Fountain, and not listed as part of the company’s assets.
The investigators were unable to determine what had happened to money raised by the sale of three vehicles purchased for £43,907. There was also no explanation for bank account withdrawals of £58,740 between May 2012 and December 2013.
How does director disqualification work?
Company director disqualification (additional guidance found here) is a punishment that can be handed down to company directors who fail to meet their legal responsibilities. Anyone can report a company director for ‘unfit conduct’ if they:
• Fail to keep proper company accounts;
• Do not send accounts and returns to Companies House;
• Do not pay tax owed by the company;
• Allow a company to trade when it can’t pay its debts;
• Use company money or assets for their personal benefit.
The disqualification restrictions mean that for a maximum period of 15 years, an individual is not allowed to:
• Be a director of any company registered in the UK, or an overseas company that has connections with the UK;
• Be involved in the formation, marketing or running of a company.
Directors must perform their duties properly
Speaking on behalf of the Insolvency Service, Robert Clarke, head of company investigations, said: “Directors have a duty to ensure their companies maintain proper accounting records, and, following insolvency, deliver them to the office holder in the interests of transparency and fairness.
“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.”
Help and support for company directors
As a director of a struggling company, it can be hard to know who to trust. Take the wrong advice and you could fail to meet your legal obligations as the director of an insolvent business. At Jameson, Smith & Co., we provide a range of services and solutions to protect you as a company director, whatever the circumstances. For a free, no-obligation initial consultation, please get in touch with our team today.