Prison sentence for director who moved money from insolvent company
A director has been convicted of fraud after attempting to move some £125,000 from his insolvent company.
The case looks at the importance of following insolvency law to the letter to avoid putting the company, its staff or its directors into further disrepute.
Andrew Reed, the director of multimedia company APR Media, instructed insolvency practitioners in October 2012 to place the company into creditors’ voluntary liquidation, with reports showing debts of more than £800,000.
The Insolvency Service, which carried out the investigation, said the insolvency practitioners could not account for around £125,000 which had been transferred out of the company’s accounts a few months before it was placed into liquidation.
It later emerged that the director had fraudulently transferred the money out of the business “in the full knowledge that the business was insolvent in order to avoid paying his creditors”.
The accounts show that Mr Reed paid himself a £100,000 dividend in August 2012 and transferred a further £25,250 into a company where his wife was a director.
Mr Reed pleaded guilty to two fraud charges and was sentenced to 15 months in prison, suspended for two years. He was also ordered to complete 120 hours of unpaid work and pay £7,500 in costs.
The report adds that the sanctions were issued despite Mr Reed attempting to remedy his mistakes by paying back some £200,000 into the company.
Glenn Wicks, Deputy Chief Investigation Officer of the Insolvency Service, said: “Andrew Reed knew his company was failing and unscrupulously ripped off his creditors by transferring money to his other company. The court has shown anyone doing this stands a serious chance of going to prison.”