Cleaning Company Directors Brush Company Affairs under the Carpet

Two directors of a Manchester based cleaning company have been disqualified for ten years after failing to exercise proper control over company affairs.

Two directors of a Manchester based cleaning company have found themselves in hot water after failing to exercise proper control over their company’s affairs. The directors, who also neglected to maintain full accounting records, have been disqualified from acting as company directors for the next ten years.

The JLK Partnership, which primarily operated as an office cleaning business, was also involved in corporate restructuring activities and substantial trading in metals. However, despite the company’s diversification, the limited company began to struggle in 2012 and entered into liquidation owing a total of £291,535 to its creditors.

Details of the disqualifications

The two directors of the JLK Partnership, Stuart Franklyn Delmonte (age 64) and Kirsty Michelle England (24), were disqualified from acting as directors for a period of six and four years respectively.

Following an investigation by the Insolvency Service, both directors gave undertakings to the Secretary of State for Business, Innovation and Skills not to act as directors in any capacity or to control any company while their bans still stand.

  • Stuart Franklyn Delmonte has been disqualified from acting as a director for six years, commencing 20 August 2014
  • Kirsty Michelle Englander has been disqualified from acting as a director for four years, commencing 29 July 2014

Lack of documentation masks impropriety

The Insolvency Service decided to wind up the company after a full investigation revealed a worrying lack of accounting records. A spokesperson for the Insolvency Service’s Public Interest Unit, said:

“Mr Delmonte neglected his duties as a company director by failing to maintain proper accounting records. Miss Englander failed to exercise the proper level of control over the affairs of a company expected of a director.

“Directors have a clear, statutory duty to ensure that their companies maintain proper accounting records. Without a full account of transactions, it is impossible to determine whether a director has discharged his or her duties properly, or is using a lack of documentation to mask impropriety.

“The Insolvency Service will use its enforcement powers to remove culpable and negligent directors from the marketplace.”

Not the first example of bad practice

Although the dearth of proper accounting records made it difficult for investigators to uncover the full extent of the company’s wrongdoings, there were plenty of signs that the JLK partnerships had been involved in bad practices for some time.

One example was a claim made by HMRC in 2010 for £277,948 of unpaid VAT on the company’s metal trading activities. However, investigators were unable to find any documentary evidence to account for the company’s operating activities during this period of time.

JLK was compulsorily wound up on 06 August 2012 with no assets and creditor liabilities of £291,535. The subsequent Insolvency Service investigation and directorship disqualifications will prevent Mr Delmonte and Ms Englander from the following for the term of their disqualification:

  • Acting as a director of a company;
  • Taking part, either directly or indirectly, in the formation, promotion or management of a company or limited liability partnership;
  • Acting as an insolvency practitioner; or
  • Being a receiver of a company’s property.

Some; but not all top tips to avoid problems in and after liquidation

  • Remember when speaking to an insolvency practitioner any information you have provided is not of a privileged nature and may be held against you when the IP becomes a liquidator
  • Avoid taking money of any kind from the company even if you owe money
  • Avoid paying family and friends (if creditors) in preference to other creditors
  • Seek professional insolvency advice as soon as you are aware you cannot pay bills when they are due
  • Keep proper company records and financial affairs in good order – seek advice and or get them in order as a priority
  • Don’t pay off creditors where you have personal guarantees as you will be asked to justify it and possibly repay this

Stay tuned to Company Debt for all the latest insolvency, administration, liquidation and business rescue news. Or get in touch for a free, confidential consultation with an experienced business turnaround practitioner.