The Department of Enterprise, Trade and Investment (the Department) has accepted disqualification undertakings for 12 years and 11 years from two directors of a Portglenone based freight transport business.
Sean Convery (41) of Cherry Hill, Maghera. Co. Londonderry and Noel Convery (33) of Moyagall Road,Portglenone, Co. Antrim agreed to disqualification respectively of their conduct as directors of Convery Haulage Limited (“the Company”).
The Company carried on the business of freight transport by road from Moyagall Road, Portglenone, Co. Antrim and went into administration on 4 May 2011 with estimated total assets available for preferential creditors of £51,500, liabilities to preferential creditors of £2,200, liabilities to the floating chargeholders of £364,289, liabilities to non-preferential creditors of £1,304,905, and an estimated deficiency as regards creditors of £1,619,894.
After taking into account the losses incurred by members (the shareholders) of the Company the total estimated deficiency was £1,619,896. The Company subsequently went into liquidation on 18 October 2012.
The Department accepted the disqualification undertaking from Sean Convery on 10 September 2013 and Noel Convery on 4 September 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 for the Company;
· causing and permitting the Company to retain a total of £228,680 of monies due to Her Majesty’s Revenue and Customs consisting of £45,609 in respect of PAYE for the years 2009/10 to 2011/12; £63,054 in respect of NIC and £120,017 in respect of VAT for the years 2009/10 and 2010/11;
· causing and permitting the Company to become involved in the smuggling of goods in an attempt to avoid the excise duty payable on them;
· causing and permitting the Company to divert excise goods within the UK to avoid having to pay the full amount of excise duty payable on them;
· causing and permitting the Company’s vehicles to use laundered fuel in an attempt to avoid having to pay the full amount of excise duty on fuel properly payable to the Crown;
· failing to account for or to deliver up to the Office Holder all company assets;
· causing and permitting the Company to obtain finance on vehicles that had previously been sold by the Company and that it did not own;
· failing to take proper action to safeguard the Company’s assets contrary to Article 174 of the Companies Act 2006;
· causing and permitting the Company to misuse bank accounts held with Northern Bank by tendering 193 cheques with a total value of £829,031 during the period 11 December 2008 to 4 May 2011 without due regard to their being honoured on presentation; and by allowing 83 direct debits with a total value of £413,084 to be dishonoured during the period 27 February 2009 to 4 May 2011. Of the dishonoured cheques, seven cheques were dishonoured for a second time after being re-presented. Also causing the Company to incur needless bank charges by lodging 61 personal cheques with a total value of £575,334 into the Company’s bank account during the period 28 February 2008 to 7 March 2011 without ensuring there were adequate funds to cover them and as a result they were referred to drawer;
· causing and permitting the Company to fail to ensure that the annual returns for the years ended 22 October 2008 to 22 October 2010 were filed within the prescribed time period;
The following additional matter of unfit conduct alleged by the Department in relation to Sean Convery and not disputed was:
· failing to account for monies paid to him in respect of the sale of the Company’s property and failing to ensure this transaction was recorded in the Company’s accounting records.
The Department has accepted 57 Disqualification Undertakings and the Court has made 6 orders disqualifying directors in the financial year commencing 1 April 2013.
Notes to editors:
1. The Official Receiver, when a company is wound up by the Court, has a duty to investigate the causes of failure and report any 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 two 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 9054 8508.
7. The period of disqualification commences at the end of 21 days beginning with the day the Disqualification Undertaking was accepted by the Department.