The Department of Enterprise, Trade and Investment (the department) has accepted a disqualification undertaking for five years from the Director of a property development company.
William Mervyn McElroy (56) of Duross Road, Irvinestown was disqualified in respect of his conduct as a director of Lough Shore Development Limited (“the Company”).
Proceedings are continuing against another director.
The Company carried on the business of property development with six sites in Donegal, Enniskillen and Maguiresbridge and entered administration on 18 August 2010 with estimated total assets of £1,195,547, liabilities to the floating charge holders of £6,960,610, liabilities of £73,660 to non-preferential creditors, and an estimated deficiency as regards creditors of £5,838,723. After taking into account the losses incurred by members (the shareholders) of the Company the total estimated deficiency was £5,848,723.
The Department accepted the disqualification undertaking from William Mervyn McElroy on 4 July 2013, based on the following unfit conduct which solely for the purposes of the disqualification procedure was not disputed:
· failing to submit a Statement of Affairs;
· failing to deliver up books and records;
· causing and permitting the Company to fail to pay over monies properly payable to the Crown totalling £8,435 consisting of £6,137 in respect of PAYE and £2,298 in respect of NIC for the years 2007/08 to 2010/11;
· causing and permitting the Company to fail to comply with Article 371(1) of the Companies (Northern Ireland) Order 1986 in that the Annual Returns made up to 26 November 2008 and 26 November 2009 were not filed;
· failing to file annual accounts for the Company on time for the three years ended 30 November 2006 to 30 November 2008 contrary to the Companies (Northern Ireland) Order 1986.
The Department has accepted 33 Disqualification Undertakings and the Court has made five orders disqualifying directors in the financial year commencing 1 April 2013.
Notes to editors:
1. Insolvency Practitioners acting as voluntary liquidators, administrative receivers and administrators have a duty to report unfit conduct to the Insolvency Service within the Department of Enterprise, Trade and Investment.
2. The aim of the Department is to bring disqualification proceedings against those directors of failed companies who have abused the privilege of limited liability status through negligence, incompetence or lack of commercial probity. The legislation contained in the Company Directors Disqualification (Northern Ireland) Order 2002 (“the 2002 Order”) is for the protection of the public and trading community but its operation should not inhibit genuine enterprise.
3. In cases where a person is subject to either a Disqualification Order made by the Court or a Disqualification Undertaking accepted by the Department, that person shall not be a director of a company, act as a receiver of a company's property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless he has the leave of the High Court. A disqualified person cannot obtain permission to act as an Insolvency Practitioner.
4. Article 9 of the 2002 Order provides that where a director is found to be unfit he must be disqualified for a minimum period of two years, up to a maximum of fifteen years. The Courts have decided that the level of seriousness of unfit conduct can fall into three brackets with the top bracket of periods over ten years reserved for particularly serious cases, six to ten years reserved for cases which do not merit the top bracket and two to five years for cases where, although disqualification is mandatory, the case is less serious.
5. The 2002 Order also allows directors, with the agreement of the Department, to avoid the need for a court hearing by offering an acceptable Disqualification Undertaking. This has exactly the same legal effect as a Disqualification Order made by the court, and will usually include a schedule identifying the director’s unfit conduct. The consequences of breaching a Disqualification Undertaking are the same as those for breaching a Disqualification Order.
6. If anybody contravenes a Disqualification Order or breaches their Disqualification Undertaking they may be committing a criminal offence and could go to prison for up to 2 years or face a fine or both. Any person with information to suggest that a disqualified person has acted in contravention of this provision should contact The Insolvency Service’s Directors Disqualification Unit on 028 90 548508.
7. The period of disqualification commences at the end of 21 days beginning with the day the Disqualification Undertaking was accepted by the Department.