bankrupt former director of Heathcroft Home Improvements has received a suspended jail sentence for defaulting on legally binding creditor agreements.

Peter Stephen Matthews of Suffolk was sentenced to three months imprisonment suspended for 12 months plus 180 community service by Cambridge Crown Court following an investigation and prosecution by The Insolvency Service and the Department for Business, Innovation and Skills.

He was also ordered to pay £5,000 in compensation.

Mr Matthews, who is already subject to a five-year Bankruptcy Restrictions Undertaking, was sentenced after pleading guilty to the removal of property after an order or judgement for money had been obtained, which remained unsatisfied at the date of bankruptcy. He spent money that should have been paid to his creditors, on a new car and on family holidays, among other things.

Mr Matthews was the director of Suffolk-based Heathcroft Home Improvements Ltd, through which he worked as a fitter.

The court heard that, after Heathcroft was wound up in 2009, Mr Matthews became liable for the company's debts as a result of personal guarantees that he had given to trade creditors. However, despite being served with a court judgement relating to these debts, he failed to pay these creditors following the sale of his family home. Instead, he transferred the money to his partner and the funds were never recovered.

The court heard that Matthews spent some of the money on advance rent and general living expenses for his family.

The court was shown bank statements revealing that Mr Matthews bought a car for £5,500 and paid £3,000 for holidays for various family members. The bank accounts also revealed numerous transactions between Matthews' account and a new business, HI Solutions, owned by his partner, through which he continued to provide his services as a window fitter. Funds were not used to satisfy either Matthews' trade or personal creditors.

As a consequence of his actions, Mr Matthews' creditors have lost out to the tune of almost £24,000.

Commenting on the case, Insolvency Service chief executive Stephen Speed said: "People genuinely struggling with debt who want to benefit from the debt relief arrangements offered by the insolvency regime must be prepared to declare all of their assets or face the penalty imposed on them. It is for the Official Receiver to decide which assets should be sold for the benefit of the creditors and which may be retained by the debtor."

Ian West, an investigator with the Department for Business, Innovation and Skills added: "We can and will investigate bankrupts, and where appropriate, take action when we find evidence of them deliberately acting to the detriment of their creditors".