On 11 February 2008 in the High Court in London a 15-year Bankruptcy Restriction Order was made against Mr Khater.
Mr Khater had been served but was not present or represented and the order was made on reading and hearing evidence presented by the Official Receiver.
The following is the summary of allegations in the Official Receiver’s report to court:
Mr Khater traded at the risk, and to the specific detriment of HM Revenue & Customs between 16 January 2006 and 19 January 2006 failing to make provision for VAT of £3,309,290. Without having any system to ensure goods dealt with existed or the value or quantum of stocks, and without ensuring that all invoiced monies derived from sales were paid directly to him, that trading was reckless, in that:
(1) Mr Khater entered into a high risk scheme of trading on the advice of somebody called “Bob”, a person who had dined in his restaurant. Futhermore, he failed to inform HM Revenue & Customs (hereinafter referred to as HMRC) either of his change in trade or the estimated volume of his trading,
(2) Mr Khater failed to carry out checks on his suppliers or customers. Mr Khater informed the Official Receiver that he had verified their VAT numbers with HMRC. However, they have no record of Mr Khater requesting these verifications. Furthermore, copies of Mr Khater’s records provided to the Official Receiver by HMRC do not contain any due diligence documents,
(3) Mr Khater failed to carry out any checks on the goods he sold, informing the Official Receiver that he lived in Burnley and the goods were stored at a port somewhere in the South of England,
(4) Mr Khater traded at a net loss of £19,466 and, in particular, he made losses of £65,197 in his sales of motor vehicles. He has provided the Official Receiver with no satisfactory explanation as to why he traded at a loss,
(5) Mr Khater further informed the Official Receiver that he received £42,000 for his trading; the only way he could have done this was to use the VAT monies to offset his losses,
(6) Mr Khater requested his customers to make payments totalling £22,173,341 inclusive of the VAT charged to six unconnected third parties; no payments were to be made to his suppliers,
(7) Mr Khater states that the VAT was paid over as deposits for the supply of stock to him. However, he failed to put in place any safeguards that either the stock for which the purported deposits had been paid would be supplied or that these monies would be refunded to him. As a consequence Mr Khater was unable to recover these monies when his VAT liability when it became due,
(8) Mr Khater’s records do not contain any documents relating to the payments and as a consequence the Official Receiver has been unable to take any action to recover these funds. | 
