Another failure for company director – how can he still be in business?

It started as an all-too-common tale of a business that took thousands of dollars from multiple customers, then failed to deliver.

Then Fair Go discovered the man behind the business had history, including arson and theft, and a previous company liquidation.

So how does a businessman like this not just survive — but stay in business? And what protections are there in place to try and stop this sort of behaviour?

When JT Feeders Ltd — a Christchurch company selling trailers and animal feeders — bit the dust, it left dozens of customers and employees without their goods or their pay.

Fair Go knows of around 30 customers who are furious with their treatment and the lack of transparency about what happened. Many clients had paid upfront and never received their goods.

The business was started by Tony Clifford King. If customers had researched his name they'd have seen quite a history.

Back in 2011 he'd worked at a petrol station, stole the takings and then set fire to the building to get rid of any evidence. King was jailed for this and a condition of his parole was to get budgeting advice.

In 2015, not long after he was released, he started up a company called Titan Concrete Ltd. It was liquidated soon after owing about $250,000. He then started JT Feeders Ltd with his wife.

They had an innovative product for animal feeding and, along with building trailers, the business got underway.

But something wasn't working.

Customers started complaining of delays and that products weren't up to scratch. Orders started falling behind. King's solution was to look for more investment.

He tried Event Hire, a company which was in the process of buying several trailers from JT Feeders. It's owned by twin brothers who specialise in providing goods and lighting to events.

The brothers decided to keep their money in their own business, but managing director Philip Anderson said it was a close call because King "pitched a good pitch".

You could say they did invest $45,000, as that's the amount they paid upfront for their trailers which never arrived. The lack of trailers has been frustrating and the loss of money has been hard: "We'll be feeling the pinch for the next couple of years."

King looked for investors elsewhere. Eventually, he found one. Jason Smith had inherited $100,000 and was wanting to get involved in a business he could build up in the future.

Because Smith's background was in galvanised products, it seemed that JT Feeders would be a good fit. King provided Smith with some facts and figures that gave a picture of the company's current financial situation.

Smith ran these past an experienced former chief executive who said they looked reasonable enough. It was only after the investment was made that the true situation became clear.

Smith described what he began to discover: "The debt wasn't $60,000, it was more around the $200,000 level and by about week 3 we had no funds to pay the staff." He was then alerted to some unread letters from the Inland Revenue Department (IRD).

"I found out we were another $50,000 in debt to the IRD. I felt like I just kept getting hit on the head with new things."

Not wanting the business to fail, Smith asked to borrow $200,000 from his step-dad to prop the company up. But even that wasn't enough to save it.

Fair Go went to some lengths to track King down, following several leads, but he was lying low.

He did eventually get in touch by email and told Fair Go that the collapse of his former company Titan Concrete wasn't his fault, and the failure of JT Feeders Ltd was down to over-investment in a sales yard in Rangiora and employing two extra staff.

He also laid the blame squarely with Smith, arguing he'd taken too much leave and had failed to order materials on time.

Smith denied being responsible, saying he only took a few days off for flu and then for stress, believing he'd lost all of his savings and those of his step-dad. He puts the business failure down to mismanagement.

The liquidator told Fair Go it agreed, saying the problem was a clear case of rising debt and mismanagement that began before Smith was on board.

Many customers spoke to Fair Go of their frustration that this wasn't King's first rodeo, and that there was little to stop him starting yet another company after this.

Even Hire's Anderson added: "I don't think someone like this should be in business at all."

King had broken the rules with his earlier company, as anyone with a dishonesty conviction is barred from being a director for five years, yet Titan Concrete was set up during this time.

When asked for an explanation as to how this could happen, the Ministry of Business, Innovation and Employment (MBIE) told Fair Go that the registrar of companies wasn't alerted to the ban because the data on specific convictions belongs to the courts and cannot be shared with MBIE.

Sound ridiculous? Victoria University of Wellington taxation professor Lisa Marriott thinks so too. She's an accounting expert and finds it unacceptable that this is the case.

She is pushing for action to be taken as soon as businesses show the signs of failing, so they can either seek the right help or be shut down.

"The way it is at the moment, it takes a very long period of time, usually a year or more."

She would like to see IRD exercise its powers with any companies that have tax payments overdue more than 21 days. For example, in Australia, businesses have 21 days to pay their debts.

If unpaid, a Director Penalty Notice is issued, meaning the director can either appoint a small business instructor to help get them back on track or opt for insolvency. In this way, the director is personally liable for the business' tax payments.

In Europe, many countries will publish debtor information on a public database revealing any directors who owe more than 50,000 Euros or whose debts have been unpaid for more than three months.

Marriott believes stronger measures like these could save additional customers from putting their money into businesses that destined to fail.