WIREDGOV

Two asset-stripping directors are disqualified for total of 29 years

News Release issued by the COI News Distribution Service on 23 June 2011

Roger Stephen Miller and Hugh Heskett Lucie-Smith were this month disqualified for 15 years and 14 years respectively from acting as company directors or from managing or in any way controlling a company, following an investigation by Company Investigations of The Insolvency Service, which was heard in the High Court.

Mr Miller and Mr Lucie-Smith were the latest of a connected group of directors or shadow directors shown to be responsible for asset-stripping a number of companies over a number of years. Since 2007, a further seven directors have accepted Undertakings disqualifying them from being directors for a total of 42 years.

Commenting on the case, David Hill of The Insolvency Service’s Company Investigations said:

“The disqualifications handed out to Mr Miller and Mr Lucie-Smith reflect the seriousness with which asset-stripping is viewed. And, that The Insolvency Service will investigate and take appropriate action to protect the business community”

The court heard that Mr Miller and Mr Lucie-Smith bore the greatest responsibility for an elaborate and ‘cynical’ asset-striping scheme, in which asset rich companies were acquired with the sole purpose of stripping them of their assets, thereby leaving them heavily insolvent.

The Insolvency Service investigation showed creditors were left unpaid, employees lost their jobs and, in some instances, the directors used a ‘target’ company’s own assets to fund its own purchase. The court also heard in some cases, the sellers were either not paid at all or not in full.

The investigation also showed that Mr Miller, aged 62 from East Dulwich, London engaged in these activities despite being subject to a disqualification order following criminal proceedings. Although not shown as a director of the companies, Mr Miller was nevertheless heavily involved in their running. He was shown to control them and acted as a director or shadow director as the occasion required.

Mr Lucie-Smith aged 67, an accountant, from Worthing, Sussex, falsely claimed to be a chartered certified accountant, and played a crucial role in the acquisition of the companies in question. Mr Lucie-Smith provided false auditors’ reports to facilitate these acquisitions and gave instructions on how the companies should be managed.

Ends

______________________________________________________________

Notes to Editors

Notes to Editors

Below are some of the companies involved:

WiraxWirewaresLimited – acquired by Ivyprime13 August 2002; placed into voluntary liquidation 10 December 2003;

ContradConstruction Limited – acquired by John Guilding 4 September 2002; went into receivership 12 November 2002;

OasisEnvironmental Services Limited – acquired by John Guilding 9 September 2002; went into compulsory liquidation 12 May 2003;

Witham Controls Limited – acquired by Primelaser 21 October 2002; placed into voluntary liquidation 16 April 2003;

Form TubesLimited – acquired by Keenrace 5 February 2003; placed into voluntary liquidation 2 December 2003;

Dellhart Pumps Limited – acquired by John Guilding April 20002; placed into receivership 18 October 2002; and

Dawbish Frames Limited – acquired by Archfold/Ivyprime November 2001; went into liquidation 22 July 2002.

1. In one instance of the asset-stripping scheme, Wirax Wirewares Limited (“Wirax”), a profitable company with a turnover of £2m, employing 75 people was acquired in 2002 by Mr Miller and his associates through a recently incorporated £1 shell company’ Ivyprime Limited using unlawful financial assistance from Wirax itself. In order to fund the purchase, Ivyprime Limited borrowed £633,000 from Wirax’ cash resources, a further £280,000 from Potential Finance Ltd against Wirax’ book debts and a further £300,000 from Glenwood Productions Ltd for which Wirax provided the security.

The court heard that such financing was illegal unless a company had complied with the ‘whitewash’ procedure in place at the time, set out in ss.155 – 158 of The Companies Act 1985. This procedure required the directors of a company to file a statutory declaration stating that in the opinion of the directors, there is no ground on which the company would be unable to pay its debts immediately and for a year after providing the assistance. Such a declaration would have to be supported by an auditors’ report. Although these documents were filed, it was clear those who did so had absolutely no belief in their contents or failed to make any attempts to assess the true impact of such assistance.

The fact that Wirax lent more than £900,000 of its own cash resources to help fund its own acquisition, was the main reason for its subsequent insolvency.

2. What is Asset-stripping?: The process of buying an undervalued company with the intent to sell off its assets for a profit. The individual assets of the company, such as its equipment and property, may be more valuable than the company as a whole due to such factors as poor management or poor economic conditions.

3. 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 from http://www.insolvency.gov.uk

4. Company Investigations, part of the Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Innovation & Skills (BIS).

5. Media Enquiries should be directed to:

Denise Rawls, Press Office Manager, Telephone 020 7674 6910 or

Ade Daramy, Press Officer on 020 7596 6187

Contacts:

Ade Daramy
Phone: 020 7596 6187
ade.daramy@insolvency.gsi.gov.uk

Denise Rawls.
Phone: 020 7674 6910
denise.rawls@insolvency.gsi.gov.uk