The directors of a hairdresser-turned-insolvency practice have been banned from managing a company for 10 years, for failing to ensure their business acted in a competent manner.
According to the Insolvency Service, Baker Donald was set up as a hairdresser in November 2011, but just over a year later started trading as an insolvency practice, providing corporate insolvency advice and referring clients to a firm of insolvency practitioners.
Lee Pitchford and Jason Pollard, who were disqualified following an investigation by the service, were the only directors at this point.
In March 2013 Baker Donald began trading as a licensed insolvency practice, employing an in-house insolvency practitioner. It was also linked to another company that offered accounting and insolvency services.
Pitchford and Pollard were disqualified following an investigation into the company after it was wound up for issuing misleading marketing letters and failing to properly deal with money received.
According to the statement, the investigation found that the two directors failed to ensure Baker Donald operated with commercial probity or acted in a competent manner.
It found that the company’s accounting records were inadequate and inconsistent with filed accounts, and that the company did not have adequate records to justify significant fees charged in seven cases before the company started trading as a licensed insolvency practice.
The firm was criticised for failing to segregate the money due to clients, itself and third parties, for using its global client account as an ‘informal unregulated banking facility’, with no consistency over the level of fees charged for its use, and for not disclosing the work it performed or the true extent of the fees charged.
The service added that Baker Donald’s marketing letters quoted misleading fees. Marketing letters offered services for businesses in financial difficulties at £496, while the firm's records showed its initial fee was at least £1,000 for a standard client letter.
At the time of liquidation, the company’s liabilities were estimated at £60,572, while its assets could not be accurately ascertained.
Cheryl Lambert, chief investigator at the Insolvency Service, said: ‘Mr Pitchford and Mr Pollard misled clients, failed to act with transparency and did not protect their clients’ money when they had a duty to do so. Their conduct demonstrates that they are unfit to be directors of a company.
‘Taking action against Mr Pitchford and Mr Pollard is a warning to all directors to seriously consider their actions and to comply with their obligations.’