The directors of failed wedding gift business Wrapit have been disqualified from acting as company directors for continuing to trade whilst the company was insolvent.
Following an investigation into their conduct carried out by government body The Insolvency Service, managing director Peter Gelardi and retail director Pepita Diamand were banned for eight years and seven years respectively.
Wrapit went into administration in August 2008 with debts of over £7m. Many of its trade creditors were housewares suppliers, including such names as Wedgwood, Waterford Crystal, Arthur Price, Le Creuset and Brabantia.
Insolvency Service investigators found that between June 2008 and July 2008 Wrapit made a number of false credit card refunds totalling £243,445. These “refunds” were processed through the company’s merchant card processing facility even though no underlying sales transactions had taken place.
The money was then used to pay staff salaries and certain suppliers of goods and services, as well as Gelardi and Diamand.
This allowed Wrapit to continue trading, and to keep taking advance payments of at least £872,000 from new customers, at a time when the company was already insolvent. Gelardi made the decision to make the false refunds and Diamand helped to implement it.
Wrapit, which was based in Wandsworth, London, began trading in 2001 to provide an internet-based wedding gift service. Couples used the company’s virtual department store to create gift lists which were purchased by their wedding guests. However, the company never made a profit and when it collapsed there were 72,000 undelivered wedding gifts for which the company owed over £4m.
Commenting on the investigation, Vicky Bagnall, director of company investigations for The Insolvency Service said: “In this sad case thousands of newly-weds have had their big day spoilt following the wrongdoing of Wrapit’s directors.
“The undertakings signed by Gelardi and Diamand send a clear message to other company directors; if you run a business in a way that is detrimental to either its customers or its creditors you could be investigated by The Insolvency Service and as a result removed from the business environment.”
The disqualification against Diamand is effective from August 6 and and against Gelardi from August 19. They will not now be allowed to act as a director of a company or take part, directly or indirectly, in the promotion, formation or management of a company.
Gelardi is currently a director of Pleaseandthankyou Ltd, which operates the pleaseandthankyou.co.uk website set up after the collapse of Wrapit. It sells a wide range of kitchenware and tabletop lines. He is also director and sole owner of Amroth Ltd -which holds the majority of shares in Pleaseandthankyou – and a director of Trinac Technology.
Diamand currently has no directorships, although she runs her own consultancy service. She attributed the collapse of Wrapit largely to the company’s bank, HSBC.