Restaurant director served with 6 year disqualification for transferring company’s asset to his own name

15 Sep 2016 11:40 AM

Mohammed Liton, director of Penicuik Clippers Ltd, has been disqualified from acting as a director of a limited company for a period of 6 years, following an investigation by the Insolvency Service.

On the 17 August 2016 Mr Liton signed a disqualification undertaking, which from 9 September 2016, prevents him from directly or indirectly becoming involved in the promotion, formation or management of a company for the duration of the order, without leave of the court.

On the 14 July 2015 Penicuik Clippers, with a liability of £44,040.34 was placed into compulsory liquidation. Mohammed Liton was the sole director of Penicuik Clippers up to his resignation on the 31 March 2015.

Following the Liquidator’s appointment, the investigation found that on or around the 11 March 2015, Mohammed Liton transferred the interest in a freehold property with a value of at least £66,723 net of mortgage finance, from the company to his own name in settlement of his outstanding loan account to the company as well as taking the subsequent balance in cash. This transaction was to the detriment of Her Majesty’s Revenue and Customs who were owed £45,220 at the time of the property transfer and £58,799 at Liquidation.

Robert Clarke, Head of Company Investigation at the Insolvency Service said:

Directors who put their own personal financial interests above those of creditors damage confidence in doing business and are corrosive to the health of the local economy.

The undertaking signed by Mohammed Liton should send a clear message to other directors tempted to help themselves first; they have a duty to their customers and creditors and if they neglect this duty they could be investigated by the Insolvency Service and removed from the business environment.

The Insolvency Service will take action against directors who do not take their obligations seriously and abuse their position of trust

Notes to editors

Mohammed Liton’s date of birth is 31 December 1965.

Mohammed Liton was appointed as director of Penicuik Clippers Limited on 6 April 2008 and remained a director until his resignation on the 31 March 2015.

Penicuik Clippers Ltd (SC320982) went into voluntary liquidation on 14 July 2015 with a deficiency to creditors of £40,989 which subsequently increased to £58,800. The company operated as a Restaurant from the premises at 26 High Street, Penicuik, EH26 8HW.

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

  • act as a director of a company
  • take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
  • be a receiver of a company’s property

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

Persons subject to a disqualification order are bound by a range of other restrictions.

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. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency 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, and how to complain about financial misconduct, is available.