Harley Street Dentist Receives Director Disqualification for Improper Use of Company Funds
The Insolvency Service has issued a press release commenting on an investigation carried out into the conduct of Dr Tapeshwar Anand (‘Mr Anand’) as Director of Q Healthcare Ltd, trading as Q Clinic (‘the Company’). He received a Director Disqualification period of 7 years for improper use of £1 million of company money. This article comments on the case – as a reminder of a director’s duties, statutory and fiduciary, to their company and its creditors.
Background to this Director Disqualification Case
The Company, which traded from premises in London’s Harley Street, was solely owned by Mr Anand. Following the investigations of the Insolvency Service, it became apparent that Mr Anand had spent £1 million of Company money on a property in a French Ski Resort.
The funds, which were received from patients for dental treatments, were spent between July 2009 and March 2013. This resulted in the Company falling into arrears of payments to its creditors, totalling £1,080,093 upon the administration of the Company on 21 May 2013.
Creditor Pressure Mounted on the Company
- Mr Anand has signed a seven year Disqualification Undertaking (‘the Undertaking’) which is the administrative equivalent of a Director Disqualification Order. In agreeing the Undertaking, Mr Anand has accepted that whilst a Director of the Company he breached his fiduciary duties and failed to act in the best interests of the Company.
- Between June 2010 and April 2013 at least 137 reminders, pressing letters and/or warnings of proposed legal actions were sent by suppliers to the Company.
- By March 2011 the Company was in arrears with paying its taxation liabilities to H M Revenue & Customs (‘HMRC’) and by June 2012 HMRC took enforcement action in respect of unpaid tax liabilities totalling £124,970.
- By May 2011 the Company was in arrears with making payments to the key supplier of dental products; in 2012 the key supplier placed restrictions, and ultimately a stop, on the supply of further goods to the Company as a result of the arrears.
- ByApril 2013 winding up proceedings were being commenced against the Company by two creditors: HMRC for tax liabilities of £87,449 and a credit finance provider for liabilities of £46,062.
What the Insolvency Service Said
Commenting on the disqualification, Martin Gitner, Deputy Head of Investigations at the Insolvency Service, said:
“It is clear that Dr Anand breached his duties as a director by using company funds to finance the refurbishment of a personally owned property, which means taxpayers and other creditors, lose out considerably.
This disqualification should serve as a warning that if directors behave in this way their conduct will be investigated fully by the Insolvency Service and they will be removed from the business environment.”
Our Comments on this Director Disqualification Case
Having caused the Company to incur expenditure of over £1 million on a property he solely owned and which the Company had no legal charge over, Mr Anand breached his duties (fiduciary and statutory) owed to both the Company and its Creditors.
The case acts as a reminder to company directors of the duties imposed on them by Statute. Not only do they have fiduciary duties to act in the best interest of the company, they also owe a duty, particularly when there are doubts as to the solvency of the Company, to act in the best interests of the Company’s creditors. That is an onerous duty.
Even without our knowing too much of the facts of this case, there is much that the Company and its Director could (and perhaps should) have done at a point well before formal insolvency to help themselves, including: taking advice from a licensed, reputable insolvency professional (i.e. a Solicitor or Licensed Insolvency Practitioner).
There are always options, which include:
- Restructuring the business,
- Refinancing the business,
- Taking advice on all of the formal insolvency options that are available (these include voluntary liquidation or a company voluntary arrangement – CVA).
A combination of one or more of those options taken at an earlier point in time, might well have solved the problems and avoided the need for a Disqualification Undertaking to be given. There are always options available to the Company and its Directors.
We are well placed and very experienced in advising in such matters.
If you have any questions regarding your duties as a Director or the conditions of your Director Disqualification Order, please contact us or call us today on 0121 200 7040 for a FREE, no obligation initial chat.