The Department for the Economy (the Department) has accepted a disqualification undertaking from the Director of a company selling used cars.
The undertaking was received for seven years from Paul McCaffrey (31) of Fyfin Road, Victoria Bridge, Co. Tyrone in respect of his conduct as a director of McCaffrey Auto Sales Ltd (“the company”).
The Company acted as a seller of used cars trading from Unit 2C, Spamount Mill, Spamount, Castlederg, Co. Tyrone, BT81 7NB. The Company went into Liquidation on 17 June 2019 with an estimated deficiency as regards creditors of £302,833.57. There was a total of £1.00 owing as Share Capital, resulting in an estimated deficiency as regards members of £302,834.57.
The Department accepted the disqualification undertaking from Paul McCaffrey on 3 October 2022 based on the following unfit conduct which solely for the purposes of the disqualification procedure was not disputed:
- Acting in contravention to Article 199 of The Insolvency (Northern Ireland) Order 1989. As a result, the liquidator has been unable to;
- Satisfy themselves that appropriate books and records of the Company exist;
- Satisfy themselves that appropriate books and records of the Company have been adequately maintained, if they do exist;
- Establish the true deficiency of the Company;
- Verify the cause of failure of the Company;
- Confirm what amounts are due to creditors at liquidation;
- Satisfy themselves that all assets have been accounted for;
- Satisfy themselves that all transactions in and out of the Company have been properly accounted for;
- Causing and permitting the Company to submit inaccurate VAT returns totalling £116,800.00 resulting in a loss of monies properly due to the Crown from 2015/16. The Company’s total VAT debt amounted to £141,980.01 and this represented 41% of the Company’s overall revised estimated deficiency. Furthermore, submitting inaccurate VAT returns, ultimately discriminating against the Crown as the Company was not paying as much VAT as it should have been and therefore had more money available to fund the continued trading of the Company;
- Failing to comply with the relevant legislation in that the annual accounts for the year ending 30 June 2017 were not filed within the prescribed periods and the accounts for the year ending 30 June 2018 were never filed; and
- Failing to comply with the relevant legislation in that the annual returns for the periods ending 26 June 2015 and 26 June 2016 were not filed within the prescribed periods and the confirmation statement for the periods ending 26 June 2017 and 26 June 2018 were never filed.
The Department has accepted four Disqualification Undertakings in the financial year commencing 1 April 2022.
Notes to editors:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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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