Ex-boss of failed dairy denied creditors thousands of pounds (From Western Telegraph)

Ex-boss of failed dairy denied creditors thousands of pounds

THE former boss of a failed Llanboidy dairy cashed shares and transferred company assets to himself, denying creditors thousands of pounds in compensation.

According to a report published by the Department of Trade and Industry's Insolvency Service, managing director Hugh Phillips broke company law and denied creditors money by granting himself a tenancy at a vastly reduced rate on Gilfach Farm, the site of the Elm Dairy enterprise.

Mr Phillips, who still lives at the farm, did not dispute 'matters of unfit conduct'' listed by the Insolvency Service. The failed businessman agreed not to hold directorships or take any part in company management for ten years.

It comes just five months after his wife and son, Marianne and Adrian, agreed similar undertakings.

Elm Dairy, which included a milk processing business and a company specialising in the marketing and sale of dairy products, collapsed five years ago with estimated debts of £10.6 million and a loss of 104 jobs.

The future had looked so bright for the business. Just two years before it ceased trading, a new brand, Lilwen milk, named after the company's office manager, went on sale. This coincided with a £2.5 million expansion, including a state-of-the-art bottling plant. The list of criticism levelled at Hugh Phillips included the transfer of company milk quota and contracts to an American company, which had been set up two months before Elm Dairy failed and was controlled by Mr Phillips.

He also failed to ensure that accounting records complied with company law, and practiced what is referred to as cheque 'cross-firing'.

This involved issuing cheques by 'Farms' in favour of a company called Warmchain, which then issued cheques to the 'Dairy' account. 'Dairy' then issued cheques back to the 'Farms account' at the company's biggest backer, Clydesdale Bank.

According to the Insolvency Service, Mr Phillips knew that this exercise was misleading Clydesdale Bank of the extent of the cash flow difficulties being experienced by 'Farms'.