Recruiter banned after awarding himself £150k before company goes into liquidation

A Rochdale recruiter has been banned from managing companies for six years after paying himself a £150k bonus just before the company entered liquidation. 

According to the Insolvency Service, Roy Davies cannot act as a director or directly or indirectly become involved without the permission of the court, in the promotion, formation or management of a company.

LTG Recruitment was incorporated in April 2015, and Davies, formerly of Frodsham, Cheshire, was appointed a director at the same time.

The Insolvency Service statement said that Davies “used the ‘EMS’ brand name extensively across various recruitment companies including LTG Recruitment. But just a year after incorporation, LTG Recruitment entered into liquidation in October 2016, a move that brought the company to the attention of the Insolvency Service”.

Investigators established that between August 2015 and September 2016, LTG Recruitment incurred liabilities owed to tax authorities. However, Davies “caused the company to loan himself more than £114k while also paying more than £38k to an associated company”, the statement said.

At the point of liquidation, LTG Recruitment owed more than £289k to tax authorities. Four other recruitment companies that Davies was also a director of went into liquidation in February 2016, also owing nearly £700k to tax authorities. Davies also borrowed money from some of the connected companies and owed nearly £300k net when they entered into liquidation.

Investigators also found that before LTG Recruitment went into liquidation, Davies had the company seek advice from an insolvency practitioner in September 2016 about the future options for the company. However, on the same day, Davies had the company award himself a salary bonus of more than £152k. After tax, which LTG Recruitment did not pay, Davies’s bonus was £82k, and this was used to reduce the amount of money he owed to LTG Recruitment.

And of the payments made to the associated company, £14k worth was paid after instructions had been made to liquidate the company.

On 24 June this year, the Secretary of State accepted a disqualification undertaking from Davies after he did not dispute that “he caused LTG Recruitment to trade at the risk and ultimate detriment of the tax authorities and enter into transactions which were to the detriment of the company’s creditors”.
Previous company names for LTG Recruitment were EMS Omega Executive Search (23 April 2015 to 19 January 2016) and EMA Recruitment Group (Services) (19 January 2016 to 26 August 2016).

The four connected companies that went into liquidation on 24 February 2016 were: RICECo (previously EMS Interim, EMS Omega and EMS Sigma Holdings); EMS Argo (formerly EMS Interim, EMS Omega and EMS Sigma Holdings); INTERIMEMSCO (formerly EMS Sigma and EMS Recruitment Selection); and D.A.S. Developments. 

The so-called ‘associated company’, which received payments of £38,724 and subsequently went into liquidation on 14 December 2017, was 8D Automotive Executive Search (formerly EMS Delta, EMS Recruitment Group – International and Blue Jay Recruitment).

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