County Tyrone director disqualified

The High Court has made a disqualification Order against the director of a vehicle sales business.

Director Disqualification Undertaking

The Order was made for eight years against Daniel Smith (35) of Coolreaghs Road, Cookstown, Co Tyrone, BT80 8FJ in respect of his conduct as a director of Silverwood Trading (NI) Limited (“the Company”).

The Company operated from Craigs Road, Cookstown and went into Liquidation on 28 November 2019, with no assets available to creditors, estimated liabilities to unsecured non-preferential creditors of £296,710.30 giving an estimated deficiency as regards creditors of £296,710.30.  After taking into account the losses incurred by members (the shareholders) of the Company the estimated total deficiency was £296,711.30.

The Court made the Disqualification Order against Daniel Smith on 29 June 2023 based on the following unfit conduct which solely for the purposes of the disqualification procedure was not disputed:

1. Causing and permitting the Company to fail to submit VAT returns resulting in a loss of monies properly due to the Crown and / or operating a policy of discrimination against the Crown throughout the entire trading period.   Causing and permitting the Company to retain a total of £296,510 due to the Crown as at the date of liquidation.  This represented 100% of the Company’s overall estimated deficiency in respect of VAT properly payable to the Crown.  Operating a policy of discrimination in that significant payments were made to trade and other creditors at a time when the HMRC debt continued to increase;
2. Failing to maintain, preserve and or deliver up accounting records for Silverwood Trading (NI) Limited in line with the requirements of Article 386 of the Companies Act 2006; and
3. Neglecting his fiduciary duty to Silverwood Trading (NI) Limited by failing to appraise himself of the trading activity of the company and / or exercise the requisite skill, care and diligence of a company director.

The High Court has made five Disqualification Orders and the Department has accepted five Disqualification Undertakings in the financial year commencing 1 April 2023.

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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