County Londonderry director agrees to disqualification

The Department for the Economy (the Department) has accepted a disqualification undertaking from the Director of a company operating in the restaurant business.

Director Disqualification Undertaking

The undertaking was received for nine years from Kerry Scullion (48) of Edenvale,  Limavady, County Londonderry in respect of her conduct as director of JOCO Hospitality Derry Limited.

The Company provided the retail sale of food in specialised stores trading from 8 Queen Street, Derry, BT48 7EF and went into Liquidation on 5 February 2019 with an estimated deficiency as regards creditors of £477,420.87. There was a total of £100 owing as Share Capital, resulting in an estimated deficiency as regards members of £477,520.87. 

The Department accepted the disqualification undertaking from Kerry Scullion on 7 June 2022 based on the following unfit conduct which solely for the purposes of the disqualification procedure was not disputed:

• Causing and permitting the Company to operate a policy of discrimination against the Crown from 2016/17.  Causing and permitting the Company to retain a total of £353,410.61 due to the Crown as at the date of liquidation. This represented 74% of the Company’s overall revised estimated deficiency in respect of PAYE and VAT properly payable to the Crown.  Furthermore, operating a policy of discrimination in that significant payments were made to trade creditors at a time when the HMRC debt continued to increase.

• Attempting to take advantage of the limited liability status, by starting up a new company, Joco Hospitality Derry Limited, which carried on the same business of Regent Hospitality Ltd. Regent Hospitality Ltd went into liquidation on 28 July 2016 owing creditors £562,822.72. Kerry Scullion was involved in the setting up of a new company under the name of Joco Hospitality Derry Limited.  Therefore causing and permitting the Company to trade and cause further detriment to trade creditors of at least £477,420.87.     

• Acting in contravention to Article 199 of The Insolvency (Northern Ireland) Order 1989 and Article 386 of the Companies Act 2006 by failing to provide a completed Director’s Questionnaire to the Liquidator and maintain and / or preserve and / or deliver up the books and records of the Company,

• Causing and permitting Joco Hospitality Derry Limited to misuse the Company bank account by causing and permitting the company to provide insufficient funds to honour cheques and direct debits and by allowing cheques and direct debits to be presented at a time when insufficient funds were retained in the account;

• Causing and permitting Joco Hospitality Derry Limited to fail to comply with the Companies Act 2006 in that annual accounts for the periods ending 30 April 2017 and 30 April 2018 were never filed;

• Causing and permitting Joco Hospitality Derry Limited to fail to comply with the Companies Act 2006 in that the confirmation statement for the period ending 04 April 2017 was not filed within the prescribed time and the confirmation statement for the period 04 April 2018 was never filed;

• Demonstrating a repeated pattern of unfit conduct. Managing Joco Hospitality Derry Limited in a similar way to that of Regent Hospitality Ltd in that she caused and permitted the Company to operate a policy of discrimination against the Crown, caused and permitted the Company to fail to maintain and/or preserve and/or deliver up proper books of account and caused and permitted the Company to fail to comply with the Companies Act 2006 in that Confirmation Statements were not filed within the prescribed periods.

The Department has accepted one Disqualification Undertaking in the financial year commencing 1 April 2022.

Notes to editors: 

1. Insolvency Practitioners acting as voluntary liquidators, administrative receivers and administrators have a duty to report unfit conduct to the Insolvency Service within the Department for the Economy.
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 90 548582.
7. The period of disqualification commences at the end of 21 days beginning with the day the Disqualification Undertaking was accepted by the Department.
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