Londonderry Director agrees to disqualification

On 15 June 2009 the Department of Enterprise, Trade and Investment (the Department) accepted a disqualification undertaking for five years from John Joseph McCartney (33) of Butlers Wharf, Enagh, Londonderry, Co Londonderry in respect of his conduct as a director of V.F.M. Branded Clothing Limited.

On 29 June 2007 the Department accepted a disqualification undertaking for four years from Martin Harran of Millburn, Castlefinn, County Donegal in respect of his conduct as a director the same company.

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 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.

The Department accepted the disqualification undertaking from John Joseph McCartney based on the following unfit conduct which solely for the purposes of the disqualification procedure was not disputed:

• Causing and permitting V.F.M. Branded Clothing Limited to retain €496,850 of debts properly payable to the Office of the Revenue Commissioners, comprising €52,278 in respect of PAYE/PRSI for the tax years 2001/02 to 2003/04, and 2005/06; and €444,572 in respect of VAT for the tax years 2002/03 to 2004/05;
• Failing to ensure that accounts for the years ended 30 June 2000 to 30 June 2003 were filed with Companies Registry within the prescribed period, contrary to the provisions of the Companies (NI) Order 1986;
• Failing to ensure that V.F.M. Branded Clothing Limited’s annual returns for the years ended 1 June 2000 to 1 June 2003 were filed on time with Companies Registry, contrary to the provisions of the Companies (NI) Order 1986;
• Causing and permitting V.F.M. Branded Clothing Limited to continue to trade to the detriment of creditors from 24 July 2003 to January 2005, at a time when he knew or ought to have known that it was insolvent;
• Failing to account for assets listed in the Statement of Affairs, particularly stock valued at £10,000 and a motor vehicle valued at £6,000.

The Department has accepted 11 Disqualification Undertakings and the Court has not yet made any Disqualification Orders in the financial year commencing 1 April 2009.

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 Disqualification Undertaking was accepted by the Department.
8. For media enquiries, please contact DETI Press Office on 028 9052 9297. Outside office hours, please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.