ES Manufacturing Ltd: directors disqualified after HP breaches and debenture failures

In Re ES Manufacturing Ltd [2026] EWHC 721 (Ch), ICC Judge Prentis has disqualified three directors of a Bedfordshire construction equipment business under section 6 of the Company Directors Disqualification Act 1986, following the company's administration in February 2021 and subsequent winding up.

The case centred on two distinct grounds of unfitness. The first — applicable to all three defendants, Helen James, her son Christopher James, and her former husband Nigel James — concerned the loss of at least £2.4m worth of equipment held under hire purchase agreements. The second, confined to Helen and Christopher, arose from the sale of assets subject to a BLME debenture without the charge holder's authorisation.

The hire purchase losses

ES Manufacturing's core business involved purchasing plant and equipment, hiring it out, and selling it on after several years. Much of that stock was acquired using HP finance from external providers. The system by which the directors managed these obligations proved fatally flawed: equipment was routinely sold before the relevant HP finance had been discharged, with the expectation that proceeds would cover repayment afterwards. When the administrators were appointed, 218 items under 16 agreements — including Hamm rollers, Kubota excavators, hydraulic hammers, and shipping containers — could not be located.

The defendants sought to blame a bespoke stock control system operated by a single IT manager, Gary Longford, which had allegedly failed without their knowledge. Judge Prentis rejected this as a defence. Even had the system functioned perfectly, it was merely the mechanism for implementing a business model that was, in the judge's words, "fundamentally flawed": the company was routinely selling goods it did not own, in breach of the HP agreements it had signed and whose terms the directors understood.

The IT defence was further damaged by a significant shift in the defendants' evidence between the skeleton argument and trial. Helen and Christopher abandoned their written account — that items were sold before finance was cleared — in favour of an oral assertion that payment always preceded sale. The judge found this revision to be "expedient and pre-meditated", unsupported by documentary evidence and inconsistent with the defendants' own prior statements.

The BLME debenture

Helen had executed BLME's debenture on the company's behalf in 2015. Its terms included a negative pledge preventing the company from entering sale-and-HP-back arrangements without the charge holder's written consent. Despite this, Helen and Christopher each signed separate SHPB agreements with Metro Bank — in February and November 2020 respectively — warranting that there were no third-party interests over the assets being sold. No authorisation was sought from BLME. Metro Bank ultimately suffered a loss of £655,274.

Christopher accepted he had never heard of a negative pledge until shortly before trial. The judge was unimpressed: directors of a company dealing extensively in financed assets were expected to understand the scope of their obligations under their primary lending facility.

Disqualification periods

Helen and Christopher received eight-year disqualifications, placing them in the Sevenoaks middle bracket. The judge cited failures under both grounds, inadequate systems and procedures, and substantial losses. Nigel, whose involvement was confined to product development and who had no material role in stock management or finance, received a four-year disqualification — a bottom bracket outcome, reflecting his more limited culpability.

The judge was explicit that the conduct was one of gross incompetence rather than dishonesty. A separate application by Christopher under section 17 of the Act was reserved to the consequentials hearing.

Copyright & permissions