Property company Director disqualified after £2m loss

Freedom Records Limited, which traded as Freedom Properties, from St Mary’s Parsonage, 1 Parsonage Street, Hulme, Manchester was placed into Administration on 09 April 2008, with an estimated deficiency to creditors of £1,989,067. The company commenced trading in March 2004, dealing in property acquisition and management; sourcing properties for investment clients; carrying out refurbishment and construction projects; and acting as both letting and management agents.

The company obtained clients by advertising its services locally, especially to the Christian community.  The investigation found that a number of Freedom Properties creditors were members of the clergy who had committed their savings to Caleb Storkey’s business.  

In signing his undertaking Mr Storkey did not dispute that he:-

caused the company to represent to its clients that deposit monies would be held on a client account, but they were not and utilised as general company funds. As a result 13 clients lost a total of £223,513;

repaid himself £47,038 between 01 January 2008 and 09 April 2008, under his director’s loan, when he ought to have known that the company was insolvent;

failed to ensure that the company dealt properly with its tax affairs. The company only filed two VAT returns during its four years of trading, and the VAT debt as at the date of Administration was in the region of £210,000.

Commenting on the case Vicky Bagnall, Director of Company Investigations for The Insolvency Service, said;  “the fact that Mr Storkey has agreed to a seven and a half year disqualification undertaking should offer public reassurance.  Where companies state funds will be held in client accounts pending completion of a transaction, as is common in property purchase, they must ensure that the funds are properly ring-fenced and not used as general funds.”

Disqualification undertakings were introduced in April 2001, they are an administrative equivalent of a disqualification order but do not involve court proceedings.  Without specific permission of a court, a person with a Company Directors Disqualification, including Undertakings, cannot :-

– act as a director of a company;

– take part, directly or indirectly, in the promotion, formation or management of a company

– be a liquidator or administrator of a company; or

– be a receiver or manager of a company’s property.

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