THE company secretary of a Tamworth car hire business that went bust with debts of almost £230,000 failed to produce records for the Official Receiver, a court heard.

Pegasus Rent a Car went into liquidation in December 2006, but its accounts for the previous two years had "disappeared".

Mr Neil Chawla, prosecuting, told Stafford Crown Court that as a result, the liquidator had been unable to assess the company's assets, find out what went wrong and where the money had gone.

Seven of the company's vehicles were also missing and unaccounted for.

The man responsible for the missing records was Rafagat Hussain, who was appointed company secretary in June 2006.

"As a result of the lack of the information, the defendant was asked for an explanation. He failed to provide any adequate explanation," said Mr Chawla.

Hussain, aged 36, of Blackpool Street, Burton, admitted failing to preserve records of accounts and failing to provide information to the liquidator. He was given a three month prison sentence, suspended for two years and ordered to do 200 hours unpaid community work and pay £6,000 costs.

Judge John Maxwell told him: "This case involves the disappearance of company records and I can only say it is highly suspicious – company records should not disappear into thin air. But, however suspicious this looks, I have to focus on what you are charged with and you are not charged with any fraudulent activity.

"I have to sentence you on the basis you negligently failed to ensure these records were preserved."

Mr Chawla said the company's last proper accounts, up to October 2004, showed a surplus of £63,000 and there was no explanation why it had lost a total of £300,000 in just two years. Just under £500,000 worth of transactions were unaccounted for, as were £126,000 worth of cheques.

Pegasus, which was based at the Riverside Industrial Estate, Atherstone Street, Tamworth, was a limited liability company which gave great advantages and protection to its directors and officials, but abuses of that status left creditors exposed.

Mr Peter Binder, defending, said Hussain had been running the business on behalf of his sister, who was a director.

Pegasus had operated successfully since it was formed in 1998 and at its height was operating up to 300 vehicles. But business went in to decline in 2005 when some of its major customers did not renew contracts.

The accounts records were kept in a number of different forms – paper copies, on a computer hard drive and on a web-based server called Rentman.

"When the business got into difficulties, the professional relationship with the accountant and Rentman broke down and this defendant, for some reason he now finds difficult to explain, failed to ensure (the records) were preserved."

Hussain was now under a restriction from the liquidator to work no more than 16 hours a week. He worked three or four days a week for a similar business run by his brother.