Two owners of a family run precision engineering firm have been handed a combined 22-year bankruptcy restriction order after failing to provide the Official Receiver with details of their assets.
Mr Caine Joseph Craig Lloyd and his father, Joseph Arthur Lloyd, were handed 12 years and 10-year bankruptcy restriction orders respectively following a four-day trial at Norwich County Court.
[h2]Precision engineering firm ceased trading in 2010[/h2]
The Lloyds were the owners of the eponymous Lloyds precision engineering firm in Watton, Norfolk. The firm ceased trading in November 2010 and the business was transferred to new owners. Following the transferral, both father and son were declared bankrupt.
Joseph Arthur Lloyd (67) was declared bankrupt on the petition of HM Revenue and Customs on 26 June 2012. The bankruptcy of his son, Caine Joseph Craig Lloyd (40), followed shortly after on 30 August 2012, again on the petition of HMRC.
At this point, the Official Receiver was appointed as Trustee in Bankruptcy and swiftly commenced an investigation into the causes of the firm’s failure and the insolvency of the owners.
A series of sham mortgages
The Official Receiver’s investigation established that the partnership had been trading as a precision engineering firm from the 1990s. Further enquiries revealed that in November 2010, the assets of the company were sold to a successor business for just £10, despite being valued at between £131,780 and £280,130. Furthermore, the £10 was not even paid.
In addition to the supposed sale of the assets, two mortgages were agreed on family homes to the value of £250,000. A third mortgage was also created on commercial premises for £90,000. However, despite the influx of cash, no money was supplied in return.
It is alleged that these mortgages were, in fact, a sham designed to prevent the company’s assets being realised for the benefit of its creditors. As a result, bankruptcy restriction proceedings were commenced by the Official Receiver on 20 June 2013. Rather than admit their improprieties, Messrs Lloyd mounted a defence against the allegations.
A finding of unfitness
District Judge McLoughlin, who presided over the four-day trial at Norwich Count Court, reached a finding of unfitness against Mr Caine Joseph Craig Lloyd and imposed a bankruptcy restriction order for a period of 12 years. The Judge also made a finding of unfitness against his father, imposing a further bankruptcy restriction order of 10 years.
When delivering his judgement, Judge McLoughlin stated his belief that the bankruptcy restriction orders were the appropriate punishment given the duo’s unreasonable, imprudent and dishonest behaviour.
Welcoming the orders, Anthony Hannon, the Official Receiver, said:
“Bankrupts have a duty to tell their Official Receiver what has become of their assets and why, and this, the Lloyds failed to do.
“As father and son have found out, such behaviour has resulted in them being investigated by the Insolvency Service and significant bankruptcy restrictions have been imposed on them.”
The bankruptcy restriction orders include the following:
- The Lloyd’s must disclose their status as a person subject to bankruptcy restrictions to a credit provider if they wish to access credit of £500 or more;
- If Lloyd’s carry on business in a different name, they must disclose to those they wish to do business with the name (or trading style) under which they were made bankrupt;
- They may not act as the director of a company or take part in its promotion, formation or management unless they get permission from the court to do so;
- They may not act as an insolvency practitioner, or as the receiver or manager of the property of a company.