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Directorship ban for car dealer who left customers and creditors 'out of pocket'

A used car dealer who left customers and creditors ‘out of pocket’ has been handed a seven-year directorship ban.

Stuart McDonald (37), of Dyce, Aberdeen, signed a disqualification undertaking, which was accepted by the Secretary of State and effective from February 20, following an investigation into his business by Aberdeen Trading Standards (ATS).

Back in August 2016 ATS ordered the 37-year-old, of Dyce, Aberdeen, to “stop acting against the interest of customers” after an investigation into his Dyce-based business found evidence of several breaches of the Enterprise Act 2002.

A series of complaints over a two-year period between September 2014 and 2016, alleged that the 37-year-old trader had been 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.

North Yorkshire Trading Standards also pursued legal action against the sole director to which he pleaded guilty in April 2016 to the allegations that he had caused the company to trade in harmful practices.

Almost a year after ATS’s August 2016 Enforcement Order was issued Northern Motors was liquidated (June 2017) following a Winding-up Order and the matter was referred to the Insolvency Service to investigate McDonald’s conduct while a director of the company.

A statement issued by The Insolvency Service revealed that investigators discovered that in August 2016, just after the Enforcement Order was obtained, McDonald had caused Northern Motors to dispose of a property worth £265,000 to a connected party.

It said: “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 McDonald’s bank account, The Insolvency Service said.

It added: “While, Stuart McDonald claims more than £87,000 was paid to Northern Motors’ creditors, the company’s lack of accounting records means he cannot verify the payments.

“Furthermore, Northern Motors owed at least £80,000 in tax and a further £111,000 to its creditors.”

McDonald signed a disqualification undertaking, which was accepted by the Secretary of State, and effective from 20 February 2019, on January 29.

The undertaking bans him from directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company for a period of seven years.

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.”

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