In the matter of Restore Builders Limited En Désastre [2024] JRC 290

This case concerned Thomas McLaughlin (Mr McLaughlin), the sole director of Restore Builders Limited (the Company), who was held personally liable for the Company’s debts due to wrongful trading. This decision is significant as it marks the first instance where the Court has made such a ruling.

The Company was incorporated in July 2022, with Mr McLaughlin as the sole director and shareholder. The Company faced financial difficulties shortly after its incorporation and was declared en désastre on 25^th November 2022.  Throughout the insolvency process, Mr McLaughlin failed to cooperate with the Viscount, providing incomplete and misleading information and failing to attend scheduled meetings.

The Court applied Article 24(7) of the Bankruptcy (Désastre) (Jersey) Law 1990 (the Désastre Law), which allows the Court to make director disqualification orders similar to those under Article 78 of the Companies (Jersey) Law 1991.  Additionally, Article 44 of the Désastre Law pertains to wrongful trading, holding directors personally liable for company debts if they knew or were reckless about the company’s inability to avoid insolvency.

The Court found that Mr McLaughlin misrepresented the Company’s assets and liabilities, mixing personal and company assets.  It was determined that he knew there was no reasonable prospect of avoiding insolvency and continued trading recklessly. His lack of cooperation with the Viscount hindered the recovery of debts and the administration of the bankruptcy.

As a result, Mr McLaughlin was disqualified from acting as a director for ten years and was held personally responsible for the company’s debts.

This case sets a precedent in Jersey for holding directors accountable for wrongful trading, emphasizing the importance of responsible corporate governance and the consequences of reckless management.