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Builder banned for taking clients’ money despite company’s insolvency

Builder banned for taking clients’ money despite company’s insolvency

A residential builder has been disqualified for continuing to take payments from clients despite the company being insolvent.

The Dodgy Director

Aidan Mark Newman (47), from Woking was the director of Montrose Design & Build Limited, a company that was incorporated in February 2015 and carried out residential building work.

But in January 2017,after only two years of business, Montrose Design and Build struggled to be profitable and had to cease trading before entering into Creditors Voluntary Liquidation.

Illegal Activity

Liquidators appointed to close the company then reported to the Insolvency Service that large amounts of money were owed to customers as their building work had not been completed despite having made staggered payments to Montrose Design & Build.

Further enquiries led investigators to discover that prior to entering into liquidation, Aidan Newman contacted an insolvency practitioner in September 2016 in order to arrange a Company Voluntary Arrangement. This would have seen the troubled company locked into a binding agreement with its creditors to pay off debts owed.

Yet despite knowing the company was in a precarious position, Aidan Newman allowed the company to accept payments totalling more than £190,000 from eight customers with existing claims in the liquidation.

Customers told investigators that Aidan Newman admitted that he used payments from one set of customers to fund building work for another, requested payments be paid earlier than originally scheduled and said that he had purchased materials using payments received when not all materials had been bought.

And investigators found that Aidan Newman had been a director of another construction company that had gone through a compulsory liquidation following a petition by the tax authorities. The company was closed down in March 2015, a month after Aidan Newman incorporated the new company – Montrose Design & Build.

The Result

On 5 December 2018, the Secretary of State accepted a disqualification undertaking from Aidan Mark Newman, after he admitted causing Montrose to trade and/or undertake transactions at the unreasonable risk of creditors, at a time when Montrose was insolvent, causing losses to creditors who have claimed at least £390,691 in the liquidation.

Effective from 25 December 2018, Aidan Newman is banned for six years 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.

Anthea Simpson, Chief Investigator for the Insolvency Service, said: “Aidan Newman continued to trade despite knowing Montrose was insolvent and caused financial distress to his clients.”

“This ban should serve as a warning to other directors that if they continue to run an insolvent business in a way that is detrimental to either its customers or its creditors, they will be investigated and as a result could lose the protection of limited liability trading.”

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About The Author

Mark Hodgson is the Managing Director of Tremark Associates, one of the UK’s leading providers of investigative services. Mark formed Tremark aged just 25 in 1995 and has over 30 years experience in private investigations and commercial debt recovery industries. He is a leading figure and a campaigner for regulation of the Industry and past President of the Association of British Investigators, a member of the World Association of Detectives, The Chartered Institute of Credit Management, The Institute of Paralegals and an associate member of R3 -The Association of Business Recovery Professionals. Mark splits his time between the Leeds and London Offices. He is a dad of two, a keen runner, cyclist and a Leeds United season ticket holder.