Belfast directors agree to disqualification

The Department of Enterprise, Trade and Investment (the Department) has accepted a disqualification undertaking for seven years from Adrian Brown (53) of Upper Knockbreda Road, Belfast, in respect of his conduct as a director of Lorne Electric Limited.

The Department has also accepted a disqualification undertaking for five years from Barbara Brown (50) of the same address in respect of her conduct as a director of the same company.

Lorne Electric Limited (“Lorne”) carried on the business of electrical and mechanical engineers and plumbing contractors from 4 Columba Terrace, Londonderry and 67-69 Castlereagh Street, Belfast and went into liquidation on 7June 2005 with assets estimated to realise £216,657; liabilities of £1,321,546 to creditors and an estimated deficiency as regards creditors of £1,104,889. After taking into account the losses incurred by members (shareholders, including the directors) of the company the total estimated deficiency was £1,104,891.

The Department accepted the disqualification undertakings from Adrian Brown and Barbara Brown on 19 March 2008 based on the following unfit conduct which solely for the purposes of the disqualification procedure was not disputed:

• Causing and permitting Lorne to trade from 1 November 2004 at the latest at a time when they knew or ought to have known it was insolvent and when such trading was to the detriment of creditors;
• Non-payment of £189,491.04 properly payable to the Crown comprising outstanding PAYE and NIC for the periods 2004/05 and 2005/06 of £106,793.40 and outstanding VAT for the periods 2004/05 and 2005/06 of £82,697.64 due to HM Revenue & Customs;
• Causing and permitting the misuse of Lorne’s credit cards in the total of £30,068.32 by purchasing goods and services in the United Kingdom, France and Spain which were of no benefit to Lorne;
• Failing in their duty under Article 229 (2) and (3) of the Companies (NI) Order 1986 to deliver up complete books and records to show and explain Lorne’s transactions;
• Failing in their duty under Article 235 (1) and (3) of the Companies (NI) Order 1986 to prepare a profit and loss account and balance sheet for each financial year.

The Department has accepted 24 Disqualification Undertakings and the Court has made Orders disqualifying 18 directors in the financial year commencing 1 April 2007.

Notes to Editors:

1. Adrian Brown and Barbara Brown are husband and wife.
2. 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.
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. 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.
5. 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.
6. 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.
7. 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.
8. The period of disqualification commences at the end of 21 days beginning with the day the Undertaking was accepted by the Department.
9. For media enquiries contact DETI Press Office on 028 9052 9604.
10. Outside office hours please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.