Print
<< Back
ODCE reports surge in liquidations
27 February 2009
By Larry Ryan
Company liquidations rose 42% in 2008 and are set to double this year, according to the annual report of the Office of the Director of Corporate Enforcement (ODCE). However, most of the directors in charge of insolvent firms avoided any restriction proceedings and can continue to act as company directors.
The ODCE received 406 initial liquidator reports in 2008, up from 286 in 2007. Its report predicts a further 100% increase in 2009 as economic conditions worsen.
To lighten the ODCE’s administrative load caused by the surge in activity, it has dropped the requirement on liquidators to produce final reports. These summary documents are sent to the office following a liquidation decision. The ODCE received 756 final reports during 2008.
Of the 353 new insolvency cases finalised during 2008, the ODCE granted full relief from restriction proceedings to the company directors on 251 occasions (71%). A further 20% of directors were granted temporary relief, while just 7% were restricted. This is a slightly more lenient approach than in 2007, when 65% of directors received full relief and 10% were restricted.
During 2008, the ODCE began a concerted clampdown on companies that haven’t been correctly wound up – particularly struck-off companies that are insolvent but have never filed returns.
The liquidator of a company in insolvent liquidation must alert the ODCE of its demise and report on the conduct of the company directors during the 12 months before its liquidation. To prevent abuses, the directors of struck-off companies can be disqualified by the High Court unless they can show that the company had no outstanding debts.
The office investigated several struck-off companies to establish if there were outstanding liabilities. In some cases, the directors were able to satisfy the ODCE that all debts had been discharged but 12 directors were disqualified as a result of the investigations and another was restricted.
On a more positive note, the report highlighted the strong level of compliance among liquidators during 2008. It revealed that there hadn’t been a single legal case due to the late filing of reports.
<< Back
