Directors of a credit union, which went into administration owing more than £7m to creditors, have been banned for a collective 21 years.
Richard Charles Nichols, Phillip Raymond Neale and Gillian Birkett were directors of Bournemouth-based Enterprise The Business Credit Union (EBCU) which went into administration in May 2015 and then liquidation in August of that year.
Nichols has been disqualified for nine years, whilst Birkett and Neale have been disqualified for six years each.
The disqualification prevents them from becoming involved in the promotion, formation or management of a company for the duration of their disqualification terms without the permission of the court.
Nichols didn’t dispute that he failed to ensure the rest of the union board either agreed, or were even aware of, changes in the contract with a company of which he was also a director. This caused extra fees of nearly £400,000 to be charged by that company.
By failing to include the money charged and paid out to his other company in EBCU’s accounts, he failed to ensure that EBCU filed accurate accounting information to the Prudential Regulatory Authority (PRA).
At this time EBCU’s capital position was below the required level and subject to the PRA’s regulatory enquiries.
Both Birkett and Neale did not dispute that they failed to ensure, from December 2014 to May 2015, that the union met its regulatory requirement to not make new loans, or make further advances in relation to, or otherwise vary the terms of, any existing loans.
In that period, the union was subject to a voluntary imposition of requirements agreed with the PRA to cease the normal operation of the union, until it could meet regulatory requirements.
In this period, it made payments of more than £635,000 in respect of 175 loans; a regulatory breach which then contributed to its insolvency.
David Brooks, group leader at the Insolvency Service, said: "On December 19 2014, Nichols told the board of EBCU that the company had ‘broken all rules in the book’ and ‘can’t continue to flout the rules’. However, both he and Neale and Birkett then allowed the company to do just that, leading directly to its failure.”