A FORMER businessman invented a fictional buyer for his company to avoid paying a creditor £20,000 when his firm fell into financial trouble, a court heard.

To avoid paying up, Andrew Lauder sent a false document saying he had sold his business to an imaginary person and that they had inherited the debt, Darlington Magistrates' Court heard yesterday.

Jonathan Bambro, prosecuting, said the offence dated from 2005, when the defendant had been operating Andrew Lauder Paving Services as a sole trader.

He owed £20,311.03 to Lafarge Aggregates at the time of the offence. Mr Bambro said: "On July 14, Mr Lauder faxed through to Roger Scroff [of the creditors] a completely fictional document, purporting to be a contract of sale.

"It said he, Mr Lauder, had sold the company to a Mr Clarkson and, as a consequence, all the debts were transferred over to Mr Clarkson, effectively throwing Mr Scroff off the scent and encouraging Mr Scroff to go and speak to Mr Clarkson."

The solicitors on the document were also fictional, the court heard. Mr Bambro said: "Mr Lauder knew exactly what he was doing when he sent the contract through to Mr Scroff."

Lafarge Aggregates realised something was wrong when it was unable to contact John Clarkson.

Mr Bambro said: "Mr Scroff made investigations of his own when he was unable to contact Mr Clarkson because the business had not been sold and because Mr Clarkson did not exist."

The aggregates company also contacted insolvency services to track down the non-existent Mr Clarkson.

Lauder, 47, also falsely claimed on a bankruptcy form that he was owed £5,000 from the sale of his business -an offence under the Perjury Act.

The court heard the offence took place on September 21, 2005, after Lauder was subject to bankruptcy procedures.

Mr Bambro said: "There never was a sale and £5,000 was never due to him."

Lauder, of Downing Court, Darlington, pleaded guilty to dishonestly securing the remission of existing liability to a creditor by deception and knowingly making a false statement in statutory declaration.

Sentencing will take place at Teesside Crown Court on a date to be arranged.