Two Co Down company directors disqualified

The High Court has disqualified a husband and wife from Newry, Joseph Rice and Janette Rice, from being company directors for periods of seven and four years respectively.

The disqualification of the married couple was as a result of their conduct as Directors of J Rice (Contracts) Limited. Joseph Rice’s conduct as a Director of Newry Town Football Club (1997) Limited was also taken into consideration when deciding the period of disqualification to be imposed.

The case was brought by the Insolvency Service of the Department of Enterprise, Trade and Investment under the Companies (NI) Order 1989 which seeks to protect the public and trading community from the abuses of the privilege conferred by limited liability status.

J Rice (Contracts) Limited traded as suppliers of general and specialised labour to the food industry from June 1997 until 21 October 1999. It was wound up by the High Court on 21 October 1999 with an estimated deficiency to creditors of £686,025.

The Department of Enterprise, Trade and Investment contended that the two defendants had traded whilst insolvent to the detriment of creditors from 31 May 1998 to 21 October 1999;

obtained excessive remuneration from the company; and misused bank accounts by tendering cheques to creditors without due regard to the prospect of their being honoured upon presentation.

This was denied by the defendants who denied each of the allegations and disputed that the Department could establish them.

However, the defendants accepted that they had failed to ensure that accounts were prepared and filed for the company for years ended 31 August 1997 and 31 August 1998. They also accepted that that they had failed to maintain statutory records; failed to submit annual returns to Companies Registry for the company relating to the year ended 28 February 1999; and retained £523,012 which should have been paid to the Crown in respect of PAYE income tax, National Insurance Contributions and VAT.

When a company is wound up by the Court, the official receiver appointed has a duty under the Insolvency (NI) Order 1989 to investigate the causes of failure and report any conduct deemed to be 'unfit' to the Insolvency Service within the Department of Enterprise, Trade and Investment.

The Department may then 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."

(SP)