The director of a car dealership and repair services has been banned from directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company for seven years after acting to the detriment of his customers and company creditors.
Northern Motors ceased to trade in August 2016 shortly after an enforcement order was granted to Aberdeen Trading Standards (ATS) against the company in connection with several breaches of the Enterprise Act 2002.
The order required Stuart McDonald to stop acting against the interest of customers and was granted in connection with complaints about Northern Motors received by Aberdeen Trading Standards over a two-year period between September 2014 and 2016.
Complaints included selling vehicles to consumers while finance remained outstanding, failing to honour payments to consumers and neglecting to provide the appropriate DVLA registration documents at the time of the sale.
Sale of illegal goods
Further examples of misconduct included the sale of illegal goods in terms of applying for incorrect registration plates and failing to register the transfer of vehicles to DVLA.
North Yorkshire Trading Standards also pursued legal action against McDonald, to which he pled guilty in April 2016 to the allegations that he had caused the company to trade in harmful practices.
Northern Motors was later liquidated in June 2017 following a winding-up order and the matter was referred to the Insolvency Service to investigate Stuart McDonald’s conduct while a director of the company.
Investigators discovered that in August 2016, just after the enforcement order was obtained, McDonald caused Northern Motors to dispose of a property worth £265,000 to a connected party.
This payment was not only detrimental to Northern Motor’s creditors but also resulted in the insolvency of the company.
While some money from the proceeds of the property sale was paid to the company’s bank and to clear a loan, £116,000 was paid directly to Stuart McDonald’s bank account.
McDonald claims more than £87,000 was paid to Northern Motors’ creditors but the company’s lack of accounting records means he cannot verify the payments.
Northern Motors owed at least £80,000 in tax and a further £111,000 to its creditors.
Disqualification undertaking
On 29 January 2019, McDonald signed a disqualification undertaking, which was accepted by the Secretary of State, and effective from 20 February 2019.
Robert Clarke, Chief Investigator for the Insolvency Service, said: “When directors do not comply with legislation that is designed to protect customers, and avoidable losses occur, the Insolvency Service will fully investigate the circumstances and take action where appropriate.
“In this case, a significant number of customers have been left out of pocket as a result of Mr McDonald’s disregard of protective legislation and it is appropriate that his disqualification is for a significant period of time.”