A COMPANY director whose dealings cost creditors nearly £200,000 has narrowly avoided jail.

Furniture company director Paul Edward Raine was handed a suspended sentence and banned from operating as a director for three years after admitting illegally resurrecting a failed company using the same trading name - an act which meant creditors lost £195,198.

Government officials told The Northern Echo that Raine’s case serves as a warning to others who may be tempted to do the same.

Bishop Auckland Magistrates’ Court heard that 47-year-old Raine’s County Durham furniture company, Furntex Ltd, which traded under the name Dreamsleeper, entered voluntary liquidation in February 2007, owing more than £500,000 to creditors.

But Raine illegally resurrected the company under the name of Dreamsleeper Ltd, and when this venture failed, it too was placed into liquidation in August 2008, with outstanding debts of £195,198, the court heard.

Raine was prosecuted by the Government’s Department for Business under the Insolvency Act 1986.

When sentencing Raine, magistrates described the incident as a serious and deliberate breach the Insolvency Act.

Raine, of Windermere Court, Darlington, pleaded guilty to the charge of acting as a director of a company known by a prohibited name.

He was given a 12 week suspended prison sentence, 150 hours and a three year blanket ban from operating as a director. He was also ordered to pay costs of £591 within two months.

A spokesman for the Department for Business told The Northern Echo they took incidents like this very seriously and would prosecute others who sought to do the same.

"We are determined to crack down on individuals who cheat honest creditors,” he said. “I hope the action taken serves as a wake-up call to would-be fraudsters who think they can get away with it."

The Northern Echo was unable to contact Raine for comment yesterday.