Leo Jones ran up debts of £290,000 was unable to provide the required records to administrators when the Blackpool-based company went into administration in February 2010. It was revealed records of sales could not be found nor could receipts showing the value of stock.
Not only did Jones fail to provide the right documents, the court found he transferred funds from the insolvent company to his other companies instead of paying creditors.
This would fall under the Preference insolvency Act. This is where a company pays back more debt to one creditor over the other, often deliberately doing this to make their ‘chosen’ company or creditor better off. In this particular case, he paid money to his other companies (solely to benefit him) rather than paying back what he owed to creditors in the appropriate ways.