Two disqualified directors who were found to be in control of a series of retail businesses while still banned from running a company have received prison sentences and a further disqualification, following an investigation by the Insolvency Service and the Department for Business, Innovation and Skills (BIS) into the companies which collapsed owing over £10m
Mark Brafman was initially disqualified from acting as a director in October 2001 for seven years. Despite this, between July 2005 and January 2008 he acted as a director of Atlantic Fashion Ltd, a retail business trading in women’s fashion clothing.
On 8 January 2008 Brafman and fellow businessman Bulbinder Singh Sandhu, who in July 2003 had received an eight year ban on acting as a director, incorporated Acton Farm Ltd, in breach of their disqualifications. The pair ran the company whilst two of their employees were registered as directors.
On 21 January 2008 Atlantic Fashions Ltd entered a pre-pack administration and its goodwill and assets were sold to Acton Farm Ltd free of debts and liabilities for £337,487. At the date of administration, Atlantic’s unsecured debts totalled £5.77m.
Acton Farm Ltd also traded in women’s clothing but by May 2008 the company had built up significant rent arrears on its shops. By 26 November 2008 all of Acton Farm’s shops had closed and the company went into liquidation the following month with £1.63m owing to creditors.
In May 2008 Brafman and Sandhu formed another company, Jet Star Retail Ltd which purchased the assets from Northworld Ltd trading as Mark One, another women’s fashion retailer. As before, they ran this company together until October 2008 when Brafman left, leaving Sandhu in sole charge. A month later the company went into administration with an estimated £9.775m owing to creditors.
On 18 October 2008 Brafman’s disqualification had come to an end. Following his departure from Jet Star Retail Ltd he incorporated another company, Primary Colours Ltd in January 2009. This company sold women’s fashion from three separate sites across London.
On 25 June 2009 Brafman was made bankrupt, which automatically disqualified him from acting as a director of a limited company. As before he ignored this restriction and continued to run Primary Colours Ltd, which was wound up in February 2010 following a creditor’s petition owing £289,432 to creditors.
At Southwark Crown Court, Brafman was sentenced to eight months in prison after pleading guilty to acting as a director of three companies whilst disqualified and of a fourth whilst an undischarged bankrupt. Sandhu pleaded guilty to acting as a director of two of the companies whilst disqualified and was sentenced to five months imprisonment.
Both were further disqualified from acting as directors of a limited company for 12 years each from October 2014, and BIS said it had started confiscation proceedings.
Liam Mannall, BIS deputy chief investigation officer, said: ‘Mr Brafman and Mr Sandhu were both experienced businessmen who were clearly aware of the responsibilities involved in directing companies. Both had been disqualified from doing so, yet over a number of years Mr Brafman chose to ignore the restrictions placed on him, as did Mr Sandhu for a lesser period.
‘BIS conducted a lengthy and thorough investigation to gather the evidence to put them before the criminal courts. This case should serve as a warning to anyone flouting the law governing the running of companies: you will risk investigation, prosecution, a criminal conviction and imprisonment.
