Bids to disqualify NI directors rise
The number of insolvency service bids to disqualify failed company directors in Northern Ireland has more than doubled since 2010, it was revealed.
Rogue executives can be barred for up to 15 years for financial malpractice.
Directors may be disqualified for failing to keep proper records or continuing to trade when a company has run out of money.
Laurence Spencer, a senior lawyer who specialises in the issue, said: “Economic conditions over recent years have undoubtedly played a part in this trend; directors of struggling companies may be more willing to take risks in order to keep trading.
“However, the Northern Ireland Insolvency Service also appears more willing to contemplate this most serious of punishments.
“The onus really is on the chairman and chief executives of Northern Ireland to understand and heed the limitations imposed upon them by the legislation, or pay an extremely high price.”
Data from the North's Department for Enterprise, Trade and Investment said the number of applications to disqualify directors made by the insolvency service has more than doubled since 2010, increasing from 23 in 2009/10 to 49 in 2011/12.
Mr Spencer, head of restructuring at Pinsent Masons international law firm in Belfast, said the figures were in stark contrast to related data for Great Britain.
“These figures stand out because the number of similar applications being made by the NI Insolvency Service’s sister agency in England and Wales and Scotland have declined during the same period,” he said.
Northern Ireland accounts for almost a tenth of the total such applications made by UK insolvency authorities, up from 3 per cent only a couple of years ago.
Mr Spencer also said a greater proportion of applications being brought were receiving approval from the courts. In 2009/10 none of the proceedings were successful, while last year ten out of 49 applications resulted in disqualification orders.
Mr Spencer added: “These disqualification orders have extremely serious consequences and in many circumstances can effectively rob people of their livelihoods.
“The judiciary does not make these orders lightly, so seeing this type of increase will raise eyebrows.”