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Monday, 30 June 2014

Two bosses in contracting business banned for 14 years

Two bosses from Highland Quality Construction Limited (HQC) have been disqualified by the Insolvency Service. The department found the pair had been involved in several payments to connected companies when it appeared HQC were in debt and could not afford to make such payments. The two directors also disposed of assets without a connected company's consent.

Gary MacDonald has been banned for eight years while Colin Thompson has been banned for six years, a total of 14 years. The company went into receivership at the start of June with accounts showing it owed the sum of £9,120,005 to creditors.

The investigation showed payments totaling £520,857 were made to linked companies, despite some debt left unpaid. Furthermore, machinery was sold off with proceeds given to a connected company. 10 items that belonged to another company were sold by the directors without that company's consent. This resulted in the related business losing £486,000.  

Head of Investigations at the Insolvency Service, Joanne Covell, commented, "At a time when a company is insolvent and not paying its debts when due, the directors also have a duty to act in the best interests of the creditors. This is to ensure that creditors are treated fairly and in a transparent manner."

"Company assets should be handled in an appropriate manner, taking account of ownership and seeking to minimise potential losses to creditors."

In insolvency terms, the company created 'preference' by choosing to pay some creditors over others. This can be referred to in s239 of the Insolvency Act 1986.

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