Former Faulds chief Chester's 12-year directorship ban
He has also been forced to repay 640,000 of a 750,000 dividend paid to him by the company shortly before it hit financial difficulties in 2003.
It is believed that PricewaterhouseCoopers has now used the cash to pay a number of unsecured creditors. KPMG, which had been appointed receiver, pursued Chester through the Court of Session and would have sent a conduct report to the DTI on whether he was fit to be a director.
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Hide AdIt is not known what that report said but it is understood that the money was paid. The minimum period a director can face disqualification for is two years and the maximum 15 years.
Chester led a management buyout of the agency from founder Jim Faulds in December 2001, but it ran into trouble after the loss of key clients - particularly Kwik-Fit and Royal Bank of Scotland - and an attempted expansion in London after buying MMDH. It closed in September 2003 owing more than 3 million.
KPMG subsequently warned that Faulds' unsecured creditors, who were owed 2.7m, would get little or none of their money back if Chester kept the cash. He told a creditors' meeting at the time that the lawyers had indicated that KPMG had grounds to pursue Chester for repayment.
Faulds had not paid a dividend since 2001, when Jim Faulds still owned the agency. He started the firm in 1985 and in 2002, its last full year of trading, it made a profit before tax of 400,000 on a turnover of 19m.
Faulds is now a non-executive director of Dunfermline Building Society and the Newhaven agency, and was not involved in the firm when it collapsed.
Chester could not be reached for comment.