Businesses have been left thousands of pounds out of pocket after a director of a Barnet van and truck hire company gave himself more than £900,000 in loans before it went bust.

John and Jane Sanders were both directors of Wheels Rentals Limited in Barnet, which owed more than £600,000 when it went into liquidation on November 16, 1998.

Creditors, who now face a legal battle to recover debts of up to £30,000 each, were dismayed to learn that Mr Sanders had received £908,499 in loans from Wheels Rentals Limited.

The loans were subsequently written off, the Insolvency Service confirmed, and the couple now enjoy life at an exclusive address at The Ivy Lodge in Hadley Common, Barnet.

Richard Jackson, of Dagenham Motors Limited, which is owed more than £5,000, said: "It is terrible that directors can take out such loans when small businesses are owed money like this.

"If you are a small business, particularly in the motor trade, there are very tight profit margins. Something like £5,000 can take a long time to get back again."

In May, the couple agreed to disqualification from being directors or managing a company for seven (John) and five (Jane) years respectively.

They now share a house with one of their sons, Oliver Sanders, 26, who with his brother John, 30, of Somerset Road, New Barnet, are directors of a new rentals company with a very similar name Wheels Limited.

John Sanders Senior's solicitor, David Rosen, of Gisby Harrison Solicitors, said Mr Sanders has no directoral involvement or management interests in Wheels Ltd.

"It is his two sons who are involved and he helps out from time to time but he gives fatherly advice, nothing more than that," he said. "So I would say he is not involved."

The company uses some of the vehicles and furniture from Wheels Rentals Ltd, which it legally purchased for £5,000, and even trades from the same premises in St Albans Road, Barnet.

The Insolvency Service, an agency working on behalf of the Department of Trade and Industry (DTI), confirmed that the company had made loans to John Sanders Snr which totalled £908,499.

A spokesman for Baker Tilly, liquidator in the Wheels Rentals case, said it was commonplace for companies to make loans to directors.

He said: "This happens fairly regularly. There are loans both ways from companies to directors and vice-versa.

"But directors do quite often take loans out with their companies. It is unusual to have loans this big though."

A spokesman for the DTI said reforms to the bankruptcy laws proposed in a forthcoming White Paper will not address the subject of directors' loans.

October 17, 2001 17:27

KEVIN BURCHALL