Two businessmen who ran restaurants in Lichfield and Stafford have been banned from acting as directors for seven years each.
Mizanur Rahman (39) and Sadiqur Rahman (40), ran Panache Restaurants Limited, a restaurant business in Walsall Road, Lichfield, WS13 8JL, and Panache Restaurants (Stafford) Limited, based in Stone Road, Stafford WS13 8JL. The companies went into liquidation on 4 October 2011 with no assets and liabilities of £528,006 (Lichfield) and £307,010 (Stafford).
An investigation found that the pair transferred the businesses and assets to new companies run by the directors' wives for far less than they were worth, on or around the time the companies ceased trading and instructions were given to place them into liquidation.
This was at a time when the directors were aware of an impending inspection due by HMRC. The transfer of the businesses and assets were done with little or no consideration.
The new companies traded from the same premises and the directors informed the liquidator that the asset sale price was £15,000 plus VAT for each company. However, there was no evidence in the accounting records of either of the liquidated companies to show that this was ever paid.
The two liquidated companies also failed to make PAYE/NIC and VAT returns and payments to HM Revenue & Customs (HMRC).
Although draft management accounts to 31 March 2011 valued the assets of the Lichfield restaurant at £126,840, comprising tangible assets of £71,256 and goodwill of £55,584 and the Stafford restaurant at £99,114, being all tangible assets, no formal valuations were carried out and the directors failed to provide information and documentation to explain how they arrived at the sale figures used prior to the sale.
The investigation also showed that unpaid PAYE/NIC liabilities began to accrue from the 2008/09 tax year, for both companies. Following an investigation into the Lichfield company's tax affairs, which had been ongoing since 2008, HMRC billed the companies for PAYE/NIC of £226,109, giving a total PAYE/NIC claim in the liquidation of £247,644. In addition, the Lichfield company owed VAT of £55,000.
The Stafford company owed HMRC PAYE/NIC of £19,948 and VAT of £60,980. The company also breached its obligations to Stafford Borough Council in respect of business rates and council tax.
Mizanur Rahman and Sadiqur Rahman gave undertakings to the Secretary of State for Business, Innovation and Skills (BIS), not to promote, manage, or be directors of limited companies until October 2020.
Commenting on the disqualifications, Sue MacLeod, chief investigator for Insolvent Investigations Midlands and West, said: "The undertakings signed by Mizanur Rahman and Sadiqur Rahman send a clear message to other company directors; if you run a business in a way that is detrimental to either its customers or its creditors you will be in our sights. The Insolvency Service will investigate you and you could be removed from the business environment."