Two unrelated companies, a football image marketing business and a motorcycle magazine, have been wound up by the High Court for misleading an invoice finance provider and a number of prospective advertisers.
The first case of everything not being quite as it seems centres on Milkshake Creations Limited, a marketing company that acted for the England World Cup squad in marketing their images and financial interests. The sole director of the company, John Paul Pearson, was disqualified for seven years for producing a fake document he handed to an invoice provider to obtain credit for the company.
An Insolvency Service investigation
An administrator was appointed to Milkshake Creations when payments to the previous directors were not made. The company was placed into administration on 14 August 2013, and a subsequent Insolvency Service investigation was launched.
The investigation revealed that, in March 2013, Mr Pearson agreed to purchase the shares in Milkshake from the other directors of the company, and make payments over the following months. At this point, the company’s other directors resigned, leaving Mr Pearson as the sole director.
In July 2013, Mr Pearson entered into discussions with an invoice finance provider, which subsequently paid Milkshake £46,000. However, the documents on which they based their financing decision had been forged by Mr Pearson. The invoice finance company were not able to recover any of the funds as a result.
Mr Pearson also failed to make payments to the company’s previous directors as promised, and it was subsequently placed into administration. At the time of administration, Milkshake had debts of more than £1million, including £450,000 owed to the previous directors and £46,000 in payments to the invoice finance provider. The company entered into liquidation on 20 January 2015.
Unfit for a company directorship
Welcoming the disqualification, Cheryl Lambert, a chief investigator at the Insolvency Service, said: “Directors who deliberately cause other businesses to lose money can expect to be investigated by the Insolvency Service.
“Mr Pearson has demonstrated that he is unfit to be involved in the management of a limited company. Taking action against him is a warning to directors that their appointments come with responsibilities and requirements to act with due care.
Motorcycle magazines removed from the shelves
Two motorcycle magazine advertising companies that claimed the magazine they were working for was affiliated with the police and the emergency services have been wound up in the High Court for misleading a host of prospective advertisers.
The court heard how the two companies, Always Enjoyable Limited and Living Creative Limited, sold advertising space in ‘Overdrive’ magazine, which was supposedly published on a quarterly basis. However, evidence from an Insolvency Service investigation showed the two companies misled advertisers in a number of ways.
This included telling advertisers the magazine was affiliated with the police and/or the emergency services, and explaining to customers that someone within their business had previously agreed to advertise in the magazine when no such conversation had taken place.
There were also a number of false statements made about the circulation, readership, and distribution of ‘Overdrive’. In reality, there was “little or no commercial benefit” for customers who chose to advertise in the magazine.
Firm action will be taken
Welcoming the High Court’s decision to wind-up the two companies, Alex Deane, an investigation supervisor with the Insolvency Service, said: “The companies took substantial sums of money from businesses for services which were of little or no commercial benefit through misleading sales practices.
“Those responsible should be aware that the Insolvency Service can and will take firm action against companies which operate in this manner.”
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Written by: Mike Smith