The directors of a Manchester-based toy wholesaler have accepted voluntary bans of 11 years each, following an investigation by The Insolvency Service.
Suhail Sarwar and his father Tariq Sarwar bought M. Gordon & Sons Ltd in October 2005 from founders the Gordon family.
The investigation found the company was due a large insurance payment following a fire at its trading premises in November 2008. Two months before M. Gordon & Sons was placed into administration, £272,000 was paid out to the company under the insurance claim.
However, despite owing at least £1.6m to creditors, the insurance pay out was diverted from the company account to Tariq Sarwar’s personal account by Suhail Sarwar.
Robert Clarke, group leader, company investigations north, at the Insolvency Service, said: “Directors who favour themselves over the interests of legitimate creditors when their company is in financial difficulty and remove funds for personal benefit leaving suppliers high and dry are not only in breach of a fundamental fiduciary duty but lacking in commercial morality.
“These disqualifications should serve as a reminder to others tempted to do the same that the Insolvency Service will rigorously pursue enforcement action and seek to remove them from the market place to protect the public for a lengthy period.”
The investigation also found the Sarwars had failed to maintain proper accounting records to explain payments of £1.3m made to third parties, with whom the company had “no regular trading relationship”.