A director of an insolvent firm has been given an 11-year ban for gifting close to £4m ($5.21m, €4.59m) worth of investments in a pop-up hotel company while he was an “undischarged bankrupt”.
Neil Leslie Burns has been by prohibited by the UK High Court from acting as a director or directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company.
The court heard that Burns was a director of B52 Investments, which was charged with holding and managing investments into a separate company, Snoozebox Holdings, a pop-up hotel business which used recycled shipping containers.
The Insolvency Service investigators found Burns had been bankrupt three times, the latest coming in 2013, and had not been discharged from his restriction.
This meant he was not permitted to manage companies.
Despite this restriction, he was heavily involved in B52 Investments and actively entered into agreements with investors while transferring their funds to connected third parties and family members.
Investment details
B52 Investments held 6.1 million shares in Snoozebox Holdings and received at least £3.3m of loans and investments from retail investors, as well as £1.7m of bank receipts into the company’s accounts.
But the directors of B52 Investments “abandoned the company after transferring all of B52 Investment’s shares in Snoozebox Holdings to connected third parties, resulting in the company’s liquidation”, according to the Insolvency Service.
The liquidation brought the company to the attention of the Insolvency Service after the directors “failed to co-operate with the liquidator or deliver up books and records”.
Lack of explanation
The lack of books and records meant that Burns “could not fully explain” what happened to £3.9m of payments.
The Insolvency Service found Burns transferred all the shares B52 Investments held in Snoozebox Holdings to connected third parties, however this was despite 1.4 million worth of shares already being used to secure investment of £373,000.
He also agreed deals with third parties for investments, which were set aside to purchase vehicles for re-sale.
These funds were transferred to connected parties and family members, but due to the lack of books and records, the directors could not explain why this happened.
During enquiries, B52 Investments’ directors were also “unable to satisfactorily explain” the transfer of the 6.1 million shares the company held in Snoozebox Holdings.
Warning
Mark Bruce, chief investigator for the Insolvency Service, said: “Throughout our enquiries Neil Burns obstructed our investigations to ensure we wouldn’t be able to discover what he had done.
“Fortunately, our investigators were able to find evidence that showed not only was he an undischarged bankrupt, but that Neil Burns had used investors’ funds for his own personal benefit and those he was closely acquainted with.
“An 11-year disqualification is a significant ban and should serve as a warning to other directors, that failing to deliver up the company records will not stop the Insolvency Service carrying out a full and thorough investigation and discovering serious misconduct.”
