The Insolvency Service has taken action against Kevin Dunstall over “unexplained payments” of more than £200,000 he made to himself, to the detriment of creditors, while running Prospect Mailing Services.
Dunstall, a self-styled restructuring expert, left a trail of disaster in the printing industry through a string of failed print and mailing ventures, culminating in the collapse of Global MP, the former St Ives Direct business in Bradford he acquired in 2013.
The Insolvency Service report into his conduct at Bradford-based Prospect Mailing Services stated: “Between 5 September 2013 and 11 November 2013, at a time when Mr Kevin Martin Dunstall knew, or ought to have known, that Prospect Mailing Services Ltd was balance sheet and cashflow insolvent, Mr Dunstall breached his fiduciary duty by making unexplained payments to himself of at least £213,515. These payments were to the detriment of creditors.”
Dunstall has now been disqualified from acting as a director for a period of seven years as a result. The disqualification order started on 11 January.
The Insolvency Service report reveals that between Dunstall’s appointment at Prospect in October 2012, and the first week of September 2013, Prospect “issued fifty nine cheques valued at £408,777 that failed to clear its bank accounts. Further, Prospect failed to complete eighty four direct-debit payments totalling £213,443, due to insufficient funds”.
Despite the firm being subject to five unsatisfied County Court Judgements, and a winding-up petition, Prospect made payments of £509,633 to an account in Dunstall’s name between 5 September 2013 and 11 November 2013. Dunstall claimed these payments were used to pay wages.
However, the Insolvency Service found that “only £296,118 of the funds paid to Mr Dunstall could have been used to pay wages. Mr Dunstall has not accounted for the remaining £213,515.”
The report stated: “The books and records of Prospect do not provide an explanation for the transfer of the funds to Mr Dunstall.”
At 31 August 2013, Prospect owed £962,082 to 77 trade creditors. The Insolvency Service said that when it went into administration on 11 November 2013 the firm had assets estimated to realise of £287,155 and liabilities to creditors of just over £2m.
This figure is more than £935,000 greater than that contained in the statement of affairs published at the time of Prospect’s administration, which put the estimated deficiency to creditors as £1,069,861.
Dunstall was made bankrupt last year as a result of a personal guarantee he gave during his ownership of Prospect.
An Insolvency Service spokesman told PrintWeek that a seven-year disqualification “was at the more serious end of the scale”.
The maximum disqualification term is 15 years.
The spokesman said the Insolvency Service could not comment on whether a further investigation was likely into Dunstall’s other business activities.
When Global MP went bust nine months after Dunstall acquired it, the total shortfall was more than £13m.
“If things are deemed serious enough we can seek an extension of a disqualification,” the spokesman added.