INSOLVENCY SERVICE
News Release (Ins/Coms 38) issued by COI News Distribution Service.
10 December 2008
The second of two
directors of Branded Leisure plc has been disqualified following
an investigation by Companies Investigation Branch of the
Insolvency Service. In November this year, Mr Renwick Haddow
became the second director of the company to receive an 8-year disqualification.
This follows the similar disqualification of his fellow director
Mr David Humphrey in May 2007.
Mr David Humphrey and Mr Renwick Haddow were respectively
managing director and finance director of Branded Leisure plc
("the company"). The company had intended to operate a
number of "Cosmopolitan Spirit" venues aimed primarily
at attracting women between the ages of 18-35. At each venue there
would be provided to the clientele under one roof important
elements of the lifestyle of the target market, namely healthy
food, drink and beauty treatment.
The licence agreement the company had signed required the regular
opening of new units. In fact only one in Manchester opened to the
public. This was after it incurred a substantial overrun in
capital expenditure and once opened, signally failed to achieve
forecast sales revenue. The company shortly afterwards ceased
trading and was placed in a Creditors Voluntary Arrangement (CVA).
Funds were raised from share sales, including a public offer and
also from an equity investment made by an Enterprise Investment
Scheme. A quote for the shares was obtained on the OFEX market
(now Plus Markets). As a result of the cessation of trading, the
company's shareholders lost all their investment and
creditors amounting to almost £2m were unpaid.
The Schedule of Unfit Conduct which formed a part of the
Disqualification Undertaking given by Mr Haddow included the following:
* That he caused and/or allowed the company to pay £25,000 in
commission in respect of shares which raised £100,000, thereby
breaching sections 97 and 98 of the Companies Act 1985.
* That he caused and/or allowed the company to enter into and
continue substantial building expenditure commitments with (inter
alia): no proper contractual arrangements in place with either the
designers or the builders; no proper costings; no proper cost
control; no proper cashflow or management account information and
no proper ongoing supervision.
* That he caused and/or allowed the company to make inaccurate
and misleading announcements on OFEX Newstrack, in particular, as
to the progress of the company's building work, sales
performance of the company, and the financial performance of the company.
* That he caused and/or allowed the company to wrongly represent
to Bank of Scotland that the Company had adhered to the conditions
of the Licence agreement with Hearst, when in fact it had not.
* That he caused and/or allowed the company to make false
representations in a Board minute dated 7 January 2003, in
particular as to the financial position and prospects of the
company, which caused investors to lose £500,000 in the Catalyst
EIS1 Fund.
* That he caused the Company to misrepresent to the bailiff the
true ownership position as to plant and equipment at the
Manchester premises.
* That he caused and/or allowed the company not to keep and/or
not to preserve proper accounting records, in breach of sections
221 and/or 222 of the Companies Act 1985.
Notes to Editors
1. David Humphrey of Barn End, Wymondley Road Letchworth, Herts
was disqualified from being a company director for a period of 8
years commencing on 10 May 2007. Renwick Haddow of Batcombe,
Shepton Mallet, Somerset was disqualified from being a company
director for a period of 8 years commencing on 20 November 2008.
Both gave undertakings not to be a director of a company in terms
of the Company Director Disqualification Act 1986.
2. The Schedule of Unfit Conduct which formed a part of the
Disqualification Undertaking given by Mr Humphrey included the following:
* That he caused and/or allowed the company to enter into and
continue substantial building expenditure commitments with (inter
alia): no proper contractual arrangements in place with either the
designers or the builders; no proper costings; no proper cost
control; no proper cashflow or management account information and
no proper ongoing supervision.
* That he caused and/or allowed the company to make inaccurate
and misleading announcements on OFEX Newstrack, the shares news
dissemination service for OFEX/Plus Markets-quoted companies, in
particular, as to the progress of the company's building
work, sales performance of the company, and the financial
performance of the company.
* That he caused and/or allowed the company to make false
representations in a Board minute dated 7 January 2003, in
particular as to the financial position and prospects of the
company, which caused investors to lose £500,000 in the Catalyst
EIS1 Fund.
* That he caused and/or allowed the company not to keep and/or
not to preserve proper accounting records, in breach of sections
221 and/or 222 of the Companies Act 1985.
3. Companies Investigation Branch ("CIB"), part of the
Insolvency Service, carries out confidential enquiries under
Section 447 of the Companies Act 1985 ("s447") and,
where necessary, takes further action in the name of the Secretary
of State. This can include winding up proceedings in the public
interest or disqualification proceedings against directors under
Section 8 of the Company Directors Disqualification Act 1986.
Branded Leisure plc was investigated under s447 and this provided
evidence to support the disqualification proceedings against both
Mr Humphrey and Mr Haddow.
4. Section 8 of the Company Directors Disqualification Act 1986
allows the Court to make a disqualification order of up to 15
years for unfit conduct. On 2 April 2001, amendments were
introduced by the Insolvency Act 2000 allowing directors, with the
agreement of the Secretary of State, to avoid the need for a Court
hearing by offering an acceptable disqualification undertaking.
This has the same legal effect as a disqualification order made by
the Court and usually includes a schedule identifying the
director's unfit conduct. The consequences of breaching a
disqualification undertaking are the same as those for breaching a
disqualification order; a fine or imprisonment for up to two years.
5. 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.
6. Companies House maintains a public register of disqualified
directors that can be viewed at http://www.companieshouse.gov.uk.
7. Members of the public who think that they know of any person
who is acting in breach of a Disqualification Order or Undertaking
should report that person's details to The Insolvency Service
Enforcement Hotline on 0845 601 3546 (24 hour message service).
8. For further information about Companies Investigation Branch,
the Insolvency Service and disqualifications see: http://www.insolvency.gov.uk