Howard Lawrence Grossman (57), from Bushey, Hertfordshire, had his disqualification undertaking accepted by the Secretary of State. Effective from 19 February, he is banned from directly or indirectly becoming involved, without the permission of the court, in the promotion, formation or management of a company.
1ST Land Limited was incorporated in August 2013 to act as the contractor for Northampton Town Football Club who wished to redevelop the Sixfields Stadium.
Howard Grossman was appointed as the sole director of the company and between December 2013 and July 2014, 1ST Land received a balance of at least £6 million from Northampton FC to go towards the costs of redeveloping the stadium. The football club in-turn received the funds from the local authority – Northampton Borough Council.
However, by January 2015, 1ST Land entered into administration following the petition of a creditor before entering into Creditors Voluntarily Liquidation in December 2015.
Due to the high-profile nature of the administration and the significant amount of money involved, in co-operation with Northamptonshire Police the Insolvency Service carried out an investigation in the public’s interest into the collapse of 1ST Land and Howard Grossman’s conduct while a director.
Investigators discovered that Howard Grossman failed to ensure the company maintained adequate accounting records or deliver a sufficient amount of records to the administrators. As a result, it has been not possible to determine the exact nature of more than £5.6m worth of payments made to various parties from 1ST Land’s accounts.
One such payment concerns approximately £2.65m of transfers made to two separate third parties, whether they were made as loans, and under what terms.
Another payment investigators were unable to establish was whether approximately £1.5m was paid to the benefit of Howard Grossman, his family and other connected parties and whether such payments were treated as dividends.
On 29 January 2019, the Secretary of State accepted a 10-year disqualification undertaking from Howard Lawrence Grossman.
Signing the undertaking has meant Howard Grossman did not dispute that he failed to ensure that 1ST Land maintained and/or preserved adequate accounting records, or in the alternative failed to ensure that such accounting records as were maintained were delivered up to the Joint Administrators. He also did not dispute that he breached his fiduciary duties to 1ST Land.
Sue MacLeod, Chief Investigator for the Insolvency Service, said:
Howard Grossman, like all directors, had specific duties as a company director but he blatantly disregarded them. The company’s insufficiencies when it came to record keeping means that we are unable to determine the exact nature of payments worth millions of pounds of tax-payers money, who along with supporters of the football club are the real victims here.
We have been able to secure a substantial ban for Howard Grossman and if he breaches his disqualification, he risks being sent to prison.
Northamptonshire Police is continuing their nationwide investigation into the missing Northampton Borough Council loan money and is working with other prosecuting authorities to recover public funds.
Notes to editors
Howard Lawrence Grossman is of Bushey and his date of birth is December 1961
1ST Land Limited (Company Reg no. 08653737).
Details of Howard Grossman’s disqualification
On 29 January 2019, the Secretary of State accepted a 10 year disqualification undertaking from Howard Lawrence Grossman, after he did not dispute failing to ensure that 1st Land maintained and/or preserved adequate accounting records, or in the alternative failed to ensure that such accounting records as were maintained were delivered up to the Joint Administrators. Mr Grossman further did not dispute to having breached his fiduciary duties to 1st Land.
The inadequate records meant that is has been not possible to:
- Establish the purpose of payments totalling £1,273,654 which were made from 1st Land’s two bank accounts between 24 September 2013 and 22 December 2014, or verify whether these payments were made in the ordinary course of business;
- Establish whether payments totalling at least £2,650,000 made to two separate 3rd parties were made as loans and, if so, the terms on which these loans were made by 1st Land.
- Establish whether payments totalling at least £233,306 made to a connected company were made as loans and, if so, the terms on which these loans were made by 1st Land.
- Establish whether payments totalling at least £1,493,518 were paid to/for the benefit of him and/or his family and others and whether such payments were treated as dividend payments.
Mr Grossman’s breached his fiduciary duties to 1ST Land by causing:
- Payments totalling at least £2,650,000 to be made by way of loans to a 3rd party without putting in place formal loan agreements to safeguard the interest of 1st Land and its assets
- Payments totalling at least £600,652 to be made to connected companies which were not to/for the benefit of 1st Land and in doing so he failed to safeguard 1st Land’s assets
- Dividend payments, totalling at least £1,493,518, to be made to himself, and in some instance to his family members on his behalf, causing 1st Land to be in a position whereby it could not meet its financial liabilities whilst the Loans remained outstanding.
1ST land employed the services of a book keeper who was instructed to produce and maintain 1st Land’s accounting records as per his undertaking
A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:
- act as a director of a company
- take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
- be a receiver of a company’s property
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.
Persons subject to a disqualification order are bound by a range of other restrictions.
The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.
Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.
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- February 5, 2019 at 9:50 am by Parker, Wayne & Kent (displayed above)
- February 5, 2019 at 9:50 am by Parker, Wayne & Kent