David Marsh’s misuse of the invoice discounting agreement left creditors of Euromix counting the cost when the Essex-based ready-mixed concrete firm was placed into administration at the end of 2013.
The Insolvency Service has now banned Marsh from directly or indirectly becoming involved in the promotion, formation or management of a company.
Discrepancies in the use of the supplier’s invoice discounting agreement were uncovered when funder the Royal Bank of Scotland Invoice Finance carried out an audit in March 2013.
It discovered Marsh had claimed funds for non-existent invoices and claimed to have made payments to the invoice discounters when no cheques were actually banked or were banked at a later date.
This was hidden by a series of intercompany fund movements and the use of concealed bank accounts.
As a result, Euromix obtained increased factoring funding and cash flow and built up a deficiency to the factors of around £500,000.
After the discovery Marsh was removed from Euromix and an interim finance director stepped in to try to continue to trade the business, which operated from six batching plants in the south east.
But the firm, which was turning over £26m, fell into administration in December with debts of £7.1m.
By January, Lafarge Tarmac had stepped in with a £4.4m rescue deal, saving 75 jobs in the process.
Both the factor and Euromix’s bank were protected by fixed and floating charges on all the assets and were paid in full.
This reduced the amount available to unsecured creditors, who eventually received around 44p in the £1.
Marsh, who was a director of the business for seven months, also admitted that he under-declared the number of staff employed or paid by Euromix in the employer annual return.
Individuals who did not appear on the P35 return but who were included within the records of Euromix as employees were paid at least £180,038 from Euromix’s bank account between 06 April 2012 and 05 April 2013
Rob Clarke of the Insolvency Service, said: “This disqualification should demonstrate to company directors that the Insolvency Service will investigate all forms of misconduct, no matter how complicated the evidence and that we will act to disqualify.
“This was a complicated and well concealed fraud where the Insolvency Service worked closely with the insolvency practitioner to identify and evidence exactly what had happened and the scale of the fraud.
“In this case, Marsh was aware that his actions were breaching the invoice discounting agreement and that his actions were to the risk of the funders and ultimately the general body of creditors.”
Marsh, who was a director of the business for seven months, also admitted that he under-declared the number of staff employed or paid by Euromix in the employer annual return.
Individuals who did not appear on the P35 return but who were included within the records of Euromix as employees were paid at least £180,038 from Euromix’s bank account between 06 April 2012 and 05 April 2013
