County Donegal director agrees to disqualification

The Department of Enterprise, Trade and Investment (the Department) has accepted a disqualification undertaking for four years from Martin Harran (56), of Millburn, Castlefinn, County Donegal, in respect of his conduct as a director of V.F.M. Branded Clothing Limited.

V.F.M. Branded Clothing Limited carried on the business of retail of branded clothing moving into the retail of laminate and wooden floors from January 2001, from Thorn Road, Letterkenny, County Donegal and Lougsheever, Corporate Park, Robinstown, Mullingar and went into liquidation on 21 April 2005 with assets of £52,770; liabilities of £807,960 and an estimated deficiency as regards creditors of £755,190. After taking into account the losses incurred by members (shareholders, including the directors) of the company the total deficiency was £855,178.

In cases where a director offers a disqualification undertaking acceptable to the Department, thus avoiding a full hearing of the matter before the court, a shorter period of disqualification than would otherwise be appropriate is normally imposed.

The Department accepted the disqualification undertaking from Martin Harran on 29 June 2007 based on the following unfit conduct which solely for the purposes of the disqualification procedure was not disputed:

• Causing and permitting the Company to retain €496,850 of debts properly payable to the Office of Revenue Commissioners in respect of PAYE/PRSI and VAT;
• Failing to ensure that accounts for the years ended 30 June 2000 to 30 June 2002 were filed with Companies Registry within the prescribed time period;
• Failing to ensure that the Company’s annual returns for the years ended 1 June 2000 to 1 June 2003 were filed on time with Companies Registry;

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

Notes to Editors:

1. Proceedings continue before the Court against one other director in this case.
2. 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.
3. 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.
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.
9. Outside office hours, please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.