County Londonderry director disqualified by the court

Brendan Anthony Fitzpatrick (33) of Larkhill Road Portstewart, Co Londonderry was disqualified for five years on the 18 October 2007, in the High Court, Belfast, in respect of his conduct as a director of Vision Integrated Developments Limited.

Vision Integrated Developments Limited carried on the business of information brokerage and the provision of software development from 31 Elizabeth Street, London and went into liquidation on 9 June 2005 with assets of £9,473; liabilities of £72,923 and an estimated deficiency as regards creditors of £63,450. After taking into account the losses incurred by members (shareholders, including the director) of the Company the total deficiency was £63,451.

The matters of unfit conduct, alleged by the Department of Enterprise, Trade and Investment (the Department) in relation to Brendan Anthony Fitzpatrick in respect of his conduct as a director of Vision Integrated Developments Limited were:

• Causing and permitting £286,333 of company funds to be lodged to his personal bank account during the period May 2002 to October 2004 as a result of which the Official Receiver has been unable to trace the flow of money through Vision Integrated Developments Limited and satisfy himself that its failure arose from genuine trading difficulties;
• Failing to maintain proper control over Vision Integrated Developments Limited’s assets and financial affairs, in that he failed to ensure that it issued invoices on time, failed to pay £68,086.84 of debts properly payable to the Crown and failed to submit returns on time to HM Customs & Excise from July 2002 to October 2004;
• Causing and permitting at least £247,183 of company funds to be transacted through his personal bank account to the detriment of creditors;
• Failing to ensure that Vision Integrated Developments Limited filed accounts for the years ended 31 March 2003 and 31 March 2004 contrary to the provisions of the Companies (Northern Ireland) Order 1986 as amended by Article 6 of the Companies (NI) Order 1990;
• Failing to ensure that Vision Integrated Developments Limited made timely Annual Returns for the periods ending 19 March 2003 and 19 March 2004 contrary to the provisions of the Companies (NI) Order 1986.

The Court stated that the most serious aspect to this case is that the Official Receiver has been unable to trace the flow of the Company's money in and out of an account which belonged to Brendan Anthony Fitzpatrick. The Court drew attention to the significant amount of money involved and further stated that it was possible that had proper invoices been raised and a more responsible approach to the running of the Company been adopted, the Official Receiver may have been able to ascertain whether there were genuine trading difficulties or not. As it was, the cumulative effect of Brendan Anthony Fitzpatrick's mismanagement of the Company's funds was that not only can no genuine trading difficulties be established, but inevitably monies were retained that were properly due to the Crown and that the Company financed its trading, at least in part, by this retention.

The Department has accepted 13 Disqualification Undertakings and the Court has made 12 Disqualification Orders in the financial year commencing 1 April 2007.

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 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 548516.
7. The period of disqualification commences at the end of 21 days beginning with the day the Order was made by the Court.
8. For media enquiries please contact Lesley Dempster in the DETI Press Office, telephone 028 9052 9297 or 07866 847919.
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