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Two disqualified directors, Mark Brafman and Bulbinder Singh Sandhu, were sentenced to a combined 13 months in prison, and disqualified for a further 12 years each, for being in control of a company while banned from doing so.

Their convictions - handed down on 16 October during a hearing at Southwark Crown Court - follow an initial investigation by the Insolvency Service and a criminal investigation and prosecution by the Department for Business Innovation and Skills (BIS).

Mr Brafman was sentenced to 8 months in prison after pleading guilty to acting as a director of 3 companies whilst disqualified and of a fourth whilst an undischarged bankrupt.

Mr Singh Sandhu pleaded guilty to acting as a director of 2 of the companies whilst disqualified and was sentenced to 5 months imprisonment. Both defendants were further disqualified from acting as directors of a limited company for 12 years each from 16 October 2014.

Mark Brafman was initially disqualified from acting as a director in October 2001 for 7 years while Mr Singh was banned in July 2003 for 8 years.

Despite his disqualification between July 2005 and January 2008, Mr Brafman acted as a director of Atlantic Fashions Limited, a retail business trading in women’s fashion clothing.

On 8 January 2008 Mr Brafman and Mr Singh Sandhu incorporated Acton Farm Ltd, in breach of their disqualifications, and ran the company whilst 2 of their employees were registered as directors.

On 21 January 2008 Atlantic Fashions limited entered a pre-pack administration and its goodwill and assets were sold to Acton Farm Ltd free of debts and liabilities for £337,487. At the date of administration, the Atlantic’s unsecured debts totalled £5.77 million.

Acton Farm Ltd also traded in women’s clothing but by May 2008 the company had built up significant rent arrears on its shops. By 26 November 2008 all of Acton Farm’s shops had closed and the company went into liquidation the following month with £1.63 million owing to creditors.

In May 2008 Mr Brafman and Mr Singh Sandhu formed another company, Jet Star Retail Ltd which purchased the assets from Northworld Ltd trading as Mark One, another women’s fashion retailer. As before, they ran this company together until October 2008 when Mr Brafman left, leaving Mr Singh Sandhu in sole charge.

A month later on 19 November 2008, Jet Star Ltd went into administration with an estimated £9.775 million owing to creditors. On 18 October 2008 Mr Brafman’s disqualification had come to an end. Following his departure from Jet Star Retail Ltd he incorporated another company, Primary Colours Ltd in January 2009. This company sold women’s fashion from three separate sites across London. On 25 June 2009 Mr Brafman was made bankrupt, which automatically disqualified him from acting as a director of a limited company. As before he ignored this restriction and continued to run Primary Colours Ltd. It was wound up on 10 February 2010 following a creditor’s petition owing £289,432 to creditors.

Mark Brafman was sentenced to 8 months imprisonment on all 4 offences to run concurrently.

Bulbinder Singh Sandhu was sentenced 5 months imprisonment on both offences to run concurrently.

Confiscation proceedings have been started by BIS against both defendants.

Deputy Chief Investigation Officer Liam Mannall from the Department for Business Innovation and Skills said;-

Mr Brafman and Mr Sandhu were both experienced businessmen who were clearly aware of the responsibilities involved in directing companies. Both had been disqualified from doing so, yet over a number of years Mr Brafman chose to ignore the restrictions placed on him, as did Mr Sandhu for a lesser period.

BIS conducted a lengthy and thorough investigation to gather the evidence to put them before the criminal courts. This case should serve as a warning to anyone flouting the law governing the running of companies: you will risk investigation, prosecution, a criminal conviction, and imprisonment.

Notes to editors

It is important that the public are protected from those who are found to be unfit to direct or manage the affairs of a company. People may be disqualified through a court order or by signing an undertaking.

Once declared bankrupt, a person is automatically disqualified from acting as a director or being concerned in the promotion, formation or management of a company. This disqualification lasts for the duration of their bankruptcy which is usually one year.

The relevant law

Section 11 of the Company Directors Disqualification Act 1986 (CDDA) provides that it is an offence for a person to act as a director of a company or directly or indirectly, take part in or be concerned in the promotion, formation or management of a company, without the leave of the court at a time when he is an undischarged bankrupt.

Section 13, CDDA 1986 provides:

If a person acts in contravention of a disqualification order or a disqualification undertaking… or is guilty of an offence under section 11, he is liable – (a) on conviction on indictment, to imprisonment for not more than 2 years or a fine, or both…

Offences:

Count 1

Mark Gerald Brafman between the 1st day of July 2004 and 21st day of January 2008, being a disqualified person by virtue of a disqualification undertaking dated 28th September 2001, acted as director or took part in or was concerned in the promotion, formation or management of a company, namely Atlantic Fashions Limited, without the leave of the Court contrary to section 13 of the Company Directors Disqualification Act 1986

Count 2

Mark Gerald Brafman between the 1st day of January 2008 and the 31st day of October 2008, being a disqualified person by virtue of a disqualification undertaking dated 28th September 2001, acted as director or took part in or was concerned in the promotion, formation or management of a company, namely Acton Farm Limited, without the leave of the Court, contrary to Section 13 of the Company Directors Disqualification Act 1986

Count 3

Bulbinder Singh Sandhu between 1st January 2008 and 23rd December 2008, being a disqualified person by virtue of a disqualification order dated 12th June 2003, acted as director or took part in or was concerned in the promotion, formation or management of a company, namely Acton Farm Limited, without the leave of the Court contrary to Section 13 of the Company Directors Disqualification Act 1986

Count 4

Mark Gerard Brafman between the 15th day of April 2008 and the 31st day of October 2008, being a disqualified person by virtue of a disqualification undertaking dated 28th September 2001, acted as director or took part in or was concerned in the promotion, formation or management of a company, namely Jet Star Retail Limited, without the leave of the Court contrary to Section 13 of the Company Directors Disqualification Act 1986

Count 5

Bulbinder Singh Sandhu between the 15th day of April 2008 and 24th day of November 2008, being a disqualified person by virtue of a disqualification order dated 12th June 2003, acted as director or took part in or was concerned in the promotion, formation or management of a company, namely Jet Star Retail Limited, without the leave of the Court contrary to Section 13 of the Company Directors Disqualification Act 1986

Count 6

Mark Gerald Brafman, between the 25th day of June 2009 and 10th day of February 2010, being an undischarged bankrupt, acted as director or took part in or was concerned in the promotion, formation or management of a company, namely Primary Colours Limited, without the leave of the Court, contrary to Section 11 (1) of the Company Directors Disqualification Act 1986

The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available fromhttps://www.gov.uk/insolvency-service

BIS’ mission is to build a Dynamic and Competitive UK economy, in particular by creating the conditions for business success and promoting an open global economy. The Criminal Investigations and Prosecutions team contributes to this aim by taking action to deter fraud and to regulate the market. We investigate and prosecute a range of offences, primarily relating to personal or company insolvencies. Further information about the work of the Criminal Investigations and Prosecutions team is available athttps://www.gov.uk/government/policy-teams/bis-criminal-enforcement-team

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