Mea Corporation duo banned as directors

High Court judge said John Aviss and William Berry did not respect the "inescapable" fiduciary duties of a director.

Two men responsible for the collapse of three companies, and an alleged role in the demise of another contractor, have been banned from managing a firm for a combined total of 18 years.

John Aviss of Tatsfield, Kent, and William Berry of Melton Mowbray, were disqualified at a High Court hearing last week, brought by the Department of Trade & Industry (DTI) and the Insolvency Service.

The case was a result of the investigation into the collapse in 2001 of heating and maintenance firm Mea Corporation (Mea) and its two subsidiaries, Mea Projects (Projects) and CJ Bartley & Co (CJB), with debts of nearly £19.5m.

Mea Corporation was run by Aviss. It acquired Projects and CJB in 2000.

Aviss was given a seven-year ban and Berry, who although not classed officially as a director had taken on director duties at Mea while disqualified, was banned for 11 years.

Both were spared the maximum penalty of 15 years, as Judge Mr Justice Lewison said neither man benefited personally from the misapplication of funds.

Although the case focused solely on Mea, questions remain over their role in the December 2001 collapse of Hertfordshire-based contractor Bickerton, which owed unsecured creditors £4.5m.

Aviss bought the firm in June 2001 from Artisan. It is alleged that Berry took on shadow director roles at the firm (see panel).

No case has yet been brought against the two men for the Bickerton affair, despite a Serious Fraud Office investigation with Cleveland Police, which resulted in the arrest and release on bail of both men, plus five others, a year after the company's collapse.

Contract Journal understands that the DTI was warned twice in the lead-up to Bickerton's collapse of claims that Berry was making management decisions on behalf of Aviss, despite being disqualified from being a director until March 2004.

Aviss blamed the collapse of Bickerton on misleading financial information during its purchase - an accusation Artisan successfully challenged in the High Court in 2004.

The same excuse was used over the fate of the Mea group.

The full High Court hearing, to which both men failed to attend, revealed through witness testimonies from six key Mea staff members that a new centralised 'treasury system' was introduced by Aviss and Berry. This came after some financial understating was found with Projects soon after its acquisition. This allowed funds to be transferred to other firms that Aviss had an interest in, to the detriment of the group (see panel).

The centralised system also meant that creditors were not being paid on time, despite protests from senior Mea staff and the company's bank.

Contract Journal was unable to contact either men at the address provided to the courts.

Mr Justice Lewison said: "Every director of a company owes fiduciary duties to that company... these duties are personal and inescapable.

"In my judgment, both Mr Aviss and Mr Berry failed to respect this fundamental principle."

Countdown to collapse

The downfall of Mea in 2001 included:

• February: schedule of debts show Mea was owed £2.25m by Aviss firms. Mea owes Projects £1.1m and CJB £285,000.
• March: on the insistence of Berry and Aviss, £525,000 transferred from Mea to Aviss firms Woodpecker and Zoa. Monthly payments set up from Mea to fund salary bills of other Aviss firm Holcot Press.
• April: £256,000 transferred from Mea to cover Holcot and Woodpecker account excesses.
• July: by this time, the indebtedness to Mea rises to £3.2m, mostly in borrowings to Zoa and Woodpecker. CJB owed £1m by group companies. Both  CJB and Projects cease trading. Debts to creditors are £3.7km at CJB and £10.7m at Projects.
• October: Mea Corporation ceases trading owing £5m.

Bickerton Construction downfall during 2001:

• June: Aviss buys Gryphon Estates, Bickerton Construction and sister company Driver Construction - all strongly performing companies - from Artisan group for £2.8m.
• Aviss only pays £2.3m in cash. The remaining £500,000 takes the form of an unsecured loan.
• The loan is secured against another of Aviss's businesses, Zoa Cororation, which goes into receivership in August.
• Aviss later refuses to pay the amount, blaming "problems" with the company's accounts. Artisan denies the claim and successfully defends case in 2004 High Court hearing for alleged breach of sale.
• Octobdr: Bickerton is regarded as "technically insolvent".
• November: shares of Gryphon Estates are transferred to shell company Driver Contracting, set up to receive them. Creditor's report on Bickerton said that share transfer had effect of taking £921,767 off the balance sheet of Bickerton Construction.
• December: Bickerton collapses owing creditors £4.5m.

[Contract Journal, 26 July 2006, p. 1]