Two marketing bosses have been disqualified for a total of 12 years after causing their company to pay more than £830,000 to businesses they had connections with, leading creditors to lose out when the company was subsequently liquidated.
White Space Communications Ltd, which traded as Whitespace and had offices in London and Sheffield, was incorporated in September 2000 and offered web design and marketing services.
Jeffrey Alexander Roberts and Anthony John Samuel Barry were both appointed as directors of the agency in 2013.
The company’s turnover increased by 37.5% year-on-year to £931,730 and its pre-tax profit grew by 9.86% to £112,066 for the year ended 31 March 2014, according to filings at Companies House.
Whitespace continued to trade successfully until January 2015 when a major customer dramatically reduced its marketing budget being spent with the business. Turnover for January 2015 dropped by around £36,500 and this downturn was not expected to improve due to conversations with the major customer.
The 13-staff company went into administration on 14 April 2015 and it subsequently entered into creditors’ voluntary liquidation on 27 January 2016, with an estimated deficiency of £401,239. The business owed at least £364,000 to unsecured creditors.
This sequence of events triggered an investigation into the company’s affairs by the Insolvency Service and investigators found that from May 2014 the two directors caused or allowed Whitespace to make £831,000 worth of payments or loans to companies they had connections with.
Roberts and Barry failed to provide any explanation or valid commercial reason to investigators for the loans and the monies paid were unrecoverable, which meant creditors who were owed money in the liquidation lost out.
A number of printers were saddled with bad debt as a result of the company's fall into administration.
Printers hit included Cardmasters, Envelope Printing, GH Display, Hedgerow Printers and MWL Group.
Both Roberts and Barry have now given disqualification undertakings to the Secretary of State for Business, Energy & Industrial Strategy having accepted they breached their fiduciary duties.
The bans prevent them both from becoming directly or indirectly involved in the promotion, formation or management of a company for six years. Roberts’ disqualification was made effective from 6 November 2018, while Barry’s ban came into effect on 19 November 2018.
Martin Gitner, deputy head of Insolvent Investigations, part of the Insolvency Service, said: “The Insolvency Service will not hesitate to investigate and seek to disqualify directors who have caused a company to loan or pay monies to connected parties rather than to the benefit of either the company or its creditors.”