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10 Dec 2008 05:07 PM
Second director disqualified in Branded Leisure plc

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