THE HIGH COURT

	                                                         Record Nos. 1994/304 COS & 
		                                                                   1996/68 COS

IN THE MATTER OF THE COMPANIES ACTS 1963-1990
AND IN THE MATTER OF LA MOSELLE CLOTHING LIMITED  (IN LIQUIDATION)
AND IN THE MATTER OF ROSEGEM LIMITED (IN LIQUIDATION)

BETWEEN

LA MOSELLE CLOTHING LIMITED (IN LIQUIDATION) AND
ROSEGEM LIMITED (IN LIQUIDATION)
			APPLICANTS
AND
DJAMEL SOUALHI
			RESPONDENT

JUDGMENT of Mr Justice Peter Shanley delivered the 11th day of May 1998.
	
	This is an application by the Liquidator of La Moselle Limited (hereinafter referred to as "La Moselle") and Rosegem Limited (hereinafter referred to as "Rosegem") pursuant to Section 150 of the Companies Act 1990 for a declaration from this Court restricting the Respondent for a period of 5 years from acting as a director of any company (other than one that meets the requirements of Section 150(3) of the Companies Act, 1990.

	Section 150 of the Companies Act, 1990 provides:-

(1) 	The Court shall unless it is satisfied as to any of the matters specified in sub-section (2) declare that a person to whom this chapter applies shall not for a period of five years, be appointed or act in any way, whether directly or indirectly, as a director or secretary or be concerned or take part in the promotion or formation of any company unless it meets the requirements set out in sub-section (3); and in subsequent provisions of this Part, the expression 'a person to whom Section 150 applies' shall be construed as a reference to a person in respect of whom such a declaration has been made.

(2)	The matters referred to in sub-section (1) are - 

	(a)	that the person concerned has acted honestly and responsibly in
		relation to the conduct of the affairs of the company and that there is
		no other reason why it would be just and equitable that he should be
		subject to the restrictions imposed by this section, or
	(b)	subject to paragraph (a), that the person concerned was a director of
		the company solely by reason of his nomination as such by a financial
		institution in connection with the giving of credit facilities to the company by such institution, provided that the institution in question has not obtained from any director of the company a personal or 

		individual guarantee of repayment to it of the loans or other forms of credit advanced to the company, or
	(c)	subject to paragraph (a), that the person concerned was a director of
		the company solely by reason of his nomination as such by a venture
		capital company in connection with the purchase of, or subscription
		for, shares by it in the first mentioned company.

(3)	The requirement specified in sub-section (1) are that - 

	(a)	the nominal value of the allotted share capital of the company shall -
		(i)	in the case of a public limited company, be at least £100,000.
		(ii)	in the case of any other company, be at least £20,000.
	(b) 	Each allotted share to an aggregate amount not less than the amount 		referred to in sub-paragraph (i) or (ii) or paragraph (a) as the case 		may be, shall be fully paid up, including the whole of any premium 			thereon, and
 	(c)	Each such allotted share and the whole of any premium thereon 			shall be paid for in cash.

(4)	Where a Court makes a declaration under sub-section (1) a prescribed 
	officer of the Court shall cause the Registrar of Companies to be furnished
	with prescribed particulars of the declaration in such form and manner as
	may be prescribed. 	

(5)	In this section -
	'Financial Institution' means - 
	
	(a)	a licensed bank, within the meaning of Section 25, or 
	(b)	a company, the ordinary business of which includes the making of loans or the giving of guarantees in connection with loans and
		"Venture Capital Company" means a company prescribed by the Minister the principal ordinary business of which is the making of share investments.

	The insolvent companies to which the restriction provisions of Section 150 apply are those companies referred to in Sections 149 and 154 of the 1990 Act (being the sections comprised in Chapter 1 of Part VII of that Act).
	Section 149 provides as follows:-

(1)	This chapter applies to any company if - 

	(a)	 at the date of the commencement of its winding up it is proved to 			 the Court, or
	(b)	at any time during the course of its winding up the liquidator of 			the company certifies, or it is otherwise proved, to the Court, that it 		is unable to pay its debts (within the meaning of Section 214 of the 			Principal Act).
 (2)	This chapter applies to any person who was a director of a company to which this section applies at the date of or within twelve months prior to the commencement of its winding up. 

(3)	This chapter shall not apply to a company which commences to be wound up 	before the commencement of this section.

(4)	 In this chapter "company" includes a company to which Section 351 of the 	Principal Act applies.

(5)	This chapter applies to shadow directors as it applies to directors.

	Section 149 of the Companies Act, 1990 was commenced on the 1st August, 1991.  
	Section 154 of the 1990 Act provides:-

	"Where a receiver of the property of a company is appointed, the provisions of this chapter shall, with the necessary modification, apply as if the references therein to the liquidator and to winding-up were construed as references to the receiver and to receivership."

	It is clear from Sections 149 and 154 of the Companies Act, 1990, that the insolvent companies to which Section 150 applies are not just companies wound up by the Court but also insolvent companies wound up voluntarily and those over whose assets a Receiver has been appointed.  In Business Communications Limited v. Keith Baxter and Colm Parsons (unreported, 21st July, 1995), Murphy J. observed (at page 5 of his judgment) that, while the provisions of Section 150(1) are mandatory in their language, the Act does not in fact impose on any particular party the obligation of bringing before the Court an application for the restriction of a director of a company to which Sections 149 and 154 apply.  He noted that:-

	"In windings-up by the Court this lacuna has been over-come by the Court on 	the further consideration of the Order for liquidation directing the official 		liquidator to bring the appropriate application on notice to persons 		appearing to be the directors thereof.

	In the case of voluntary liquidations the Court does not have either the responsibility or the machinery for giving comparable directions.  It may be that voluntary liquidators and receivers are not sufficiently conscious of the provisions of Chapter 1 of Part VII of the 1990 Act or else they do not see it as their function to bring relevant cases before the Court.  Perhaps it will be necessary for the legislature to consider the provision of a particular sanction to ensure that the many cases which have obviously arisen since August, 1991, are duly pursued.  If not, there would be a apparent injustice to the directors of insolvent companies wound up by the Court as against those wound-up voluntarily."
	
	The Court's directions in windings-up by the Court has resulted in Section 150 applications being pursued in almost all such cases; however, it must be said that only a handful of cases of insolvent companies in receivership or voluntarily wound-up, have come before the Courts on an application under Section 150 of the Companies Act, 1990.  Having regard to the large volume of insolvent companies which are wound up voluntarily, the injustice envisaged by Murphy J. still remains unredressed, whereby directors of such companies are permitted to avoid the sanction of Section 150 of the Companies Act, 1990, by the fortuitous circumstance of a voluntary winding-up, or indeed a receivership.  
	Quite apart from the injustice that results from the failure to restrict directors whose conduct merits restriction, there is also the factor that the primary purpose of the Section 150 restriction is the protection of the public from persons who,  by their conduct, have shown themselves unfit to hold the office of, and discharge the duties of, a director of a company and, in consequence, represent a danger to potential investors and traders dealing with such companies.  Where far more insolvent companies are wound up voluntarily than are wound up by the Court, it is clear that the purpose of Section 150 cannot be fully achieved in the absence  of a statutory obligation cast on the liquidators (of insolvent companies wound up voluntarily) and on receivers of insolvent companies to bring before the Courts applications under S 150 of the 1990 Act where the conditions stipulated by Section 149 of that Act are met.
	As appears clear from Section 150, the Court is obliged to restrict a director unless he brings himself within one of the three exceptions set out in sub-section (2).  In the present case I am only concerned with the first such exception.  As is clear from the wording of sub-section (2)(a), there are three hurdles that a director has to surmount:-

(a)	He must establish that he has acted honestly in relation to the affairs of 		the company.	
(b)	He must establish that he has acted responsibly in relation to the affairs of the company. 
(c)	He must satisfy the Court that there is no other reason why it would be just and equitable that he should be subject to the restrictions imposed by the section.

	In considering the meaning of the word "responsibly" Murphy J. said in Business Communications Limited v. Keith Baxter and Colm Parsons, supra:-

	"Ordinarily 'responsibly' will entail compliance with the principal features of the Companies Acts and the maintenance of the records required by those Acts.  The records must be basic in form and modest in appearance.  But they must exist in such a form as to enable the directors to make a reasonable commercial decision and auditors (or liquidators) to understand and follow the transactions in which the company was engaged."

	As Murphy J. noted, the simple fact that a business fails is not evidence of a lack of responsibility nor indeed is it evidence of dishonesty.  But  there may well be circumstances where a business will fail due to a lack of business probity or indeed sheer incompetence (without actual dishonesty or non-compliance with the principal features of the Companies Acts) such as to amount to such a want of responsibility as to permit a restriction under Section 150, sub-section (1), of the Companies Act, 1990.
	In England and Wales there is no directly comparable legislation to the restriction provisions of Section 150:  However, Section 300 of the Companies Act, 1985 in England and Wales does provide for the disqualification of directors where their conduct makes them "unfit to be concerned in the management of a company".  In the case of Re. Lo-Line Motors Limited, 1988, B.C.L.C. 698, Brown-Wilkinson V.C. said at page 703:-
	"What is the proper approach to deciding whether someone is unfit to be a director?  The approach adopted in all the cases to which I have been referred is broadly the same.  The primary purpose of the section is not to punish the individual but to protect the public against the future conduct of companies by persons whose past record as directors of insolvent companies have shown them to be a danger to creditors and others ......  Ordinary commercial misjudgement is in itself not sufficient to justify disqualification.  In the normal case, the conduct complained of must display a lack of commercial probity, although I have no doubt that in an extreme case of gross negligence or total incompetence, disqualification could be appropriate". 

	 The conduct referred to by Brown-Wilkinson VC. is similar to the conduct identified by Mr Justice Murphy, namely, that a director, broadly complying with his obligations under the provisions of the Companies Acts and acting with a degree of commercial probity during his tenure as a director of the company, will not be restricted on the grounds that he has acted irresponsibly.
	Thus it seems to me that in determining the "responsibility" of  a director for the purposes of Section 150(2)(a) the Court should have regard to:-
	(a)	The extent to which the director has or has not complied with any obligation imposed on him by the Companies Acts 1963-1990.
	(b)	The extent to which his conduct could be regarded as so incompetent as to amount to irresponsibility.
	(c)	The extent of the directors responsibility for the insolvency of the company.
	(d)	The extent of the directors responsibility for the net deficiency in the assets of the company disclosed at the date of the winding up or thereafter.
	(e)	The extent to which the director, in his conduct of the affairs of the company, has displayed a lack of commercial probity or want of proper standards.
These criteria necessarily overlap: for example a failure to keep proper books of account may directly contribute to the company becoming insolvent and may be caused by the incompetence of a director.  But not all situations of a want of responsibility will result from a breach of obligations imposed by the Companies Acts; for example, a director's inability to see the "writing on the wall" (e.g. an inability to see from a perusal of the company's management accounts that the company was trading while insolvent) may result from sheer incompetence and justify a restriction (see Re: Continental Assurance Co. of London Plc, Secretary of State and Industry -v- Burrows 1997 1 BCLC 48, where an inability to read and understand the statutory accounts of a company was considered a ground for disqualification of a director).  Equally, a director who takes excessive sums from the company by way of drawings for salary without regard to the financial state of health of the company may be said to have acted without commercial probity although he did not necessarily fail to comply with his obligations under the Companies Acts 1963 - 1990. 
	Apart from satisfying the Court that he as a director acted honestly and responsibly, the director must also satisfy the Court that there are no other reasons why it would be just and equitable to restrict him from acting as a director of a company.  It is to be noted that acting honestly and responsibly relates to "the conduct of the affairs of the company" and arguably such bears no relation to any period after the commencement of a winding-up or receivership of the particular company where the person may not be involved any further in the conduct of the affairs of the company.  That the director must satisfy the Court that the there is no other reason why it would be just and equitable to restrict the director, allows the Court to take into account, in  my view, any relevant conduct of the director after the commencement of the winding-up or the receivership (for example, any failure to co-operate with the liquidator or receiver) in deciding whether or not to make an Order under Section 150, sub-section (1), of the Companies Act, 1990.

THE FACTS
	La Moselle was incorporated on 3rd April, 1984; Rosegem was incorporated on the 13th November, 1987.  Both companies had their registered offices at 15 Castle Market, Dublin 2.  99 of the 100 issued shares in La Moselle were owned by Mr Soualhi who also was the beneficial owner of the shares in Rosegem.  He was also a Director of both of these companies.  La Moselle was a wholesaler of ladies and children's clothing which was mostly sourced in Portugal.  Of the retailers to whom La Moselle sold its clothing, some 65% of it was sold to retail companies owned and controlled by Mr Soualhi.  Rosegem was such a company:  It operated a retail shop at the G.P.O. Arcade in Dublin, where it rented premises from a subsidiary of An Post.  In the clothing and fashion industry there are two seasons: firstly, there is the Spring and Summer seasons stretching from March to August; then there is the Autumn and Winter season stretching from September through to February.  La Moselle financed the purchases of its clothing by entering into an agreement with a company called Cambridge Confirming Limited, a finance house (hereinafter referred to as "CCL"), who from 1989 onwards agreed to discharge the liabilities of La Moselle at each month end to La Moselle suppliers, providing La Moselle's liabilities to CCL were discharged at each year end.  Initially, the arrangement between La Moselle and CCL was that CCL would allow La Moselle a facility of up to £250,000.00 per season.  In June, 1993, with rumours of difficulties in CCL, that facility was reduced by agreement between Mr Soualhi and CCL to £165,000.00 per season.  This according to Mr Soualhi adversely affected his business and he had to close down two of his shops in Galway and Limerick.  These were shops operated by two companies owned and controlled by Mr Soualhi:  The first of the companies was called Cougar Styles Limited and the second of the companies was called Ballyclover Limited.
	The June 1993 agreement which Mr Soualhi entered into with CCL, apart from reducing the facilities provided to La Moselle, also made provision for the clearing by La Moselle of all its liabilities to CCL by the 15th October, 1993.  One of the terms of the agreement involved CCL issuing a cheque for £20,000.00 to La Moselle on the 1st August, 1993 and La Moselle in turn issuing a cheque payable to CCL for £50,000.00 on the 31st July, 1993.  The La Moselle cheque was stopped by Mr Soualhi:  He says it was stopped because CCL had refused to honour their agreement to pay to La Moselle the sum of £20,000.  A further La Moselle cheque payable to CCL dated 31st August, 1993 was also stopped by Mr Soualhi.  La Moselle did not clear its indebtedness to CCL by the 15th October, 1993, in accordance with its June agreement.  Although it entered into a further agreement with CCL for the purposes of clearing up its indebtedness to that company, it failed to do so and on the 17th November, 1994, CCL presented a petition in respect of the sum then due to them of £219,688.  On foot of that petition a winding-up Order was made on 6th March, 1995.  La Moselle in fact had ceased trading in November, 1994.  Rosegem itself had ceased to trade in September, 1994, at which date it was indebted to La Moselle in the sum of £169,602.
	The statement of affairs of Mr Soualhi in relation to La Moselle was sworn on the 20th April, 1995; it disclosed gross assets of £695,075 with gross liabilities of £487,891, leaving a surplus of £207,184.  The gross assets included a claim for damages for breach of contract against CCL valued at £650,000.  The statement of affairs of Rosegem which was sworn by Mr Soualhi on the 23rd May, 1996 disclosed no assets and a deficiency of £48,479.26 made up, as to £26,991 unsecured creditors and £21,437 preferential creditors.  What is noteworthy about the statement of affairs of each of these companies is that there were no trade creditors.
	There are audited accounts for La Moselle for the year ending 31st August, 1992.  There are management accounts for that company for the years ending the 31st August, 1993, the 31st August, 1994, and the 31st August, 1995.  A perusal of the profit and loss accounts of La Moselle for the years 1993, 1994 and 1995 show losses for each of those years of £85,746, £19,156, and £238,054, respectively.  For Rosegem management accounts exist for the years 1991 to 1994 and show losses on the profit and loss account of £87,400 for the year 1991, £14,970 for the year 1992, £9,957 for the year 1993 and £25,545 for the year 1994.  Viewing each of these companies on a net worth basis, La Moselle's position in 1993 disclosed  a net deficiency of £181,572, in 1994 a deficiency of £200,728 and in 1995 a deficiency of £440, 819.  For Rosegem the position in 1991 was that there was a net deficiency of £38,310; for 1992, there was a net worth of £49,500; in 1993 there was a net deficiency of £63,237 and in 1994 there was a net deficiency of £88,782.  The Liquidator has forcefully expressed his opinion that La Moselle continued to trade and to supply Rosegem at a time when Mr Soualhi clearly knew that La Moselle and Rosegem were both insolvent companies.  In particular, he suggests that La Moselle so traded from September, 1992 to November, 1994, when Mr Soualhi knew that it was insolvent and that even when it ceased to trade in November, 1994 no efforts were made by Mr Soualhi to wind-up the company.  Apart from this aspect of matters the Liquidator also draws the Courts attention to a number of other matters which he says establish that Mr Soualhi acted irresponsibly, if not dishonestly.  The other matters to which he draws attention are:-

(a)	No effort was made by Mr Soualhi to stop trading or to wind-up Rosegem when it was clear that it had become insolvent.  	

(b)	The unsecured creditors of La Moselle did not include any trade suppliers of clothing.  Mr Soualhi so organised his affairs that he was able to secure the payment of all suppliers of clothing to him at the expense of the Revenue and other creditors such as Dublin Corporation and his landlords.

(c)	La Moselle wrote off debts to the other companies that were owned and controlled by Mr Soualhi of some £476,717.

(d)     	Extreme difficulty was encountered by the Liquidator and his staff in obtaining the books and records of La Moselle and Rosegem.  The Liquidator points to paragraphs 8 and 9 in Mr Soualhi's Affidavit of  Discovery in relation to Rosegem.  This Affidavit was sworn by Mr Soualhi on 1st August, 1997 and discloses, says the Liquidator, Mr Soualhi's cavalier attitude to the books and records of Rosegem.

	Paragraph 8 of that Affidavit states as follows:-

	"(8)	I say and believe that up until the time the company ceased to trade it operated from premises as Unit 6, G.P.O. Arcade, Henry Street, Dublin 1.  I say that when the company ceased trading I caused the offices to be shut down and all possessions, documents and equipment belonging to the company or otherwise were removed from the offices and/or thrown out.
	  
	(9)	I say and believe that any documents relating to the company which were removed from the said offices (if any) were brought to another premises at 15 Castle Market, Dublin 2 from which I regularly operated.  I say that I subsequently moved from these premises in December, 1994 and further caused another clear-out of documentation, equipment and possessions to 3 Ely Place, Dublin 2 where I operated from until the end of September, 1995.  Since that date I caused a further clear-out of documentation, equipment and possessions to an office premises at Stephen's Court, Dublin 2." 

(e)	The credit card statements relating to Mr Soualhi disclosed that payments to credit card companies were made by La Moselle between 1991 and  1994 in the amount of £99,447.99, of which £35,259.96 represents payments by La Moselle to restaurants and night-clubs.  These payments are described as "motor and travel expenses" in the management accounts of the company.

(f)	Mr Soualhi drew £39,034 from Rosegem between 1992 and 1994 at a time when, according to the Liquidator, he must have known that the company was clearly insolvent and these drawings were made without provision for tax.  Equally, in relation to La Moselle in the same period, Mr Soualhi drew £29,950 without any provision for tax being made.  While Mr Guilfoyle, as Liquidator, maintains this to be the position it should be noted that Mr Soualhi's Accountant, Mr Maxwell, gave evidence that the sums in question which were drawn by Mr Soualhi and those sums in respect of which the credit card payments were made, were sums which were properly accounted for in the management accounts of the company and in relation to which any liability for tax had been discharged.

(g)	The Liquidator did an analysis of the cash-flow of all the related companies of Mr Soualhi for the year ending the 31st August, 1992.  This analysis disclosed a negative cash-flow of some £21,000.  In the same period the Liquidator points to the fact that Mr Soualhi paid himself a salary (according to his Accountant) of some £106,800.  The Liquidator views such drawings in all the circumstances as being highly irresponsible on the part of Mr Soualhi.

(h)	As at the 31st July, 1993, the evidence established that La Moselle had  a current account and two deposit accounts at Bank of Ireland, Westland Row, Dublin.  Mr Soualhi contended during the course of the case that he only stopped La Moselle's cheque for £50,000 (drawn on La Moselle's current account at Bank of Ireland, Westland Row) because CCL had itself dishonoured its cheque payable to La Moselle for £20,000.  An analysis of the current and deposit accounts of La Moselle at Westland Row disclose, according to the Liquidator, that there were no funds to meet a cheque for £50,000 at the time it was presented for payment or indeed thereafter.

Against this series of allegations Mr Soualhi says:-

(1)	He did not wish to wind-up La Moselle because he believed he had a bona fide cause 	of action against CCL and that he wished to sue CCL.  He gave evidence that he had sought the advice of his Solicitors as to whether or not he had a cause of action against CCL.  He also gave evidence of the fact that his Solicitors had informed the Liquidator of his contention that he had a claim for damages for breach of contract against CCL.  

(2)	Mr Soualhi was adamant that he had not preferred trade creditors over other creditors such as the Revenue Commissioners.  While he was so adamant, it must be said, that no credible explanation was given for the total absence of any trade creditors from the list of unsecured creditors in the statement of affairs of La Moselle.

(3)	Both Mr Soualhi and his Accountant, Mr Maxwell, contended that they had given full co-operation to the Liquidator and his staff in answering any queries they had and in terms of providing any books and records of either company which had been sought by the Liquidator.  Mr Maxwell expressed his annoyance to the Court in relation to queries made of him by the staff of the Liquidator:  He said that most of these queries were made at a time when Court hearings were imminent and never allowed him a reasonable time within which to respond to the queries.

(4)	As to the credit card payments, Mr Soualhi maintained that each and every one of such payments (including the restaurant and night-club payments) were payments made for the benefit of La Moselle or its related companies in that they represented entertainment of clients of La Moselle or those companies.

(5)	Mr Soualhi was adamant that La Moselle could easily have ensured (as it  had done on  a previous occasion) that funds were in the current account of La Moselle at Bank of Ireland, Westland Row to meet the cheque for £50,000 which was payable to CCL and dated the 31st July, 1993.

(6)	Mr Soualhi stated that the statement of affairs which he had sworn in relation to Rosegem was true and accurate.  He indicated that the statement of affairs did not disclose a liability to Rosegem's landlords, Arcade Property Company Limited, of arrears of rent and service charge in the sum of £44,475.92.  That sum, said Mr Soualhi, had been forgiven by the landlord in exchange for a surrender of the lease to the premises which they had rented:  To that end he produced to the Court two letters (these letters comprise exhibit DS3 to an Affidavit sworn by Mr Soualhi on the 2nd May 1997) and they are dated 3rd October, 1994 and 26th September, 1994.  The latter of which letters stated:-
	"This is to confirm that the handing over of the leasehold interest with all the fixtures and fittings was in full and final settlement of all debts past and present and future as already discussed and agreed with you".

He did not refer to or produce letters from An Post Solicitors dated 29th September, 1994 and 13th October, 1994, the latter of which stated:-

	"Dear Sir,

	Further to my letter of 29th September, 1994, and your reply thereto dated 3rd October, 1994, in connection with the above unit.
	I have been instructed by Mr Eamon Harrington that the keys to Unit 6 have been handed over by you.

	I must now refer to the second paragraph of your letter of  3rd October, 1994, and it appears that you have misunderstood the last paragraph of my letter of 29th September, 1994 in which I informed you that your liabilities to our client at the end of August, 1994 stands at £66,358 which remains until the said sum has been paid.
	
	Yours faithfully
	
	Alan Gasker,
	Solicitor,
	An Post."

	Judgment was in fact obtained by Arcade Property Company Limited against
Rosegem on the 15th November, 1993.  In his Affidavit of 8th October, 1997, Mr Soualhi says (at paragraph 3):-

	"The judgment was obtained against Rosegem by default, the company having been taken by surprise as no letter or warning or receipt of proceedings was ever received by the company."

	On the 7th September, 1993, the Solicitor for An Post wrote to Mr Soualhi claiming payment of £44,475.92 and threatening proceedings to recover that sum and also stated in the letter that "proceedings will be issued against you company without further notice".

CONCLUSIONS

(i)	I do not regard Mr Soualhi as a reliable witness.  In particular, I do not accept
	the explanations advanced by him for stopping the cheque payable to CCL on
	31st July, 1993:  The most likely explanation is that there was no funds to meet that cheque which would have been dishonoured on presentation if it had not in fact been stopped.  Equally, I am also satisfied that Mr Soualhi was less than frank in his explanation of Rosegem's relationship with its landlord, Arcade Property Company Limited.  I am satisfied that, contrary to what Mr Soualhi says, he was aware of correspondence from Rosegem's landlord threatening proceedings, that he was aware of the proceedings, and that his surrender of the premises to the landlord was not in fact in consideration of the landlord waiving arrears of rent.  It follows from this last matter that I do not accept as accurate or reliable the statement of affairs of Mr Soualhi sworn on 29th April, 1996 in relation to Rosegem.

(ii)	I accept the Liquidator's view that La Moselle continued to trade and to supply Rosegem when Mr Soualhi well knew that both those companies were insolvent.  I believe that state of affairs continued in relation to both companies from September, 1992 until September and November, 1994 when Rosegem and La Moselle ceased trading respectively.  During this lengthy period of in excess of two years, Mr Soualhi was assiduous in ensuring that his trade creditors were paid.  I also accept the Liquidator's view that upon an examination of the accounts of La Moselle and its associated companies, that La Moselle forgave debts of those companies which between 1992 and 1994 amounted in total to the sum of £476,717 without any apparent reason or justification.

(iii)	In circumstances where both Rosegem and La Moselle were insolvent in 1993 and 1994, Mr Soualhi was nonetheless maintaining a very busy and indeed expensive lifestyle, all of which according to himself was business related.  His credit card statements (paid for by his companies) disclosed that in 1994 alone (when he surely knew that Rosegem and La Moselle were insolvent) he managed to travel to Bangkok, Ho Chi Minh City, Hanoi, Hong Kong, Seoul, Taiwan, San Francisco, Shanghai, Boston, Jamaica, Paris, New York, London and San Tropez.  Whilst as I have indicated Mr Soualhi claimed that this travel was business related, I had no evidence other than his oral evidence that this was in fact the case.  There was no evidence of any sales or purchases resulting form any one of these trips and even if one did allow that the trips were for business purposes, the travel and associated costs show a want of commercial probity on Mr Soualhi's part, having regard to the overall parlous financial position of La Moselle and Rosegem.

(iv)	Apart from the credit card payments between 1992 and 1994, Mr Soualhi drew £29,950 from La Moselle in this period; he further drew £39,034 from Rosegem in this period; in the year ending 31st August, 1992, - when the cash flow of his five companies was a negative one of £21,000 - he drew £106,800 from these companies.  Having regard to the financial condition of these companies (which included Rosegem and La Moselle) I do not regard the drawings made by Mr Soualhi as being the actions of a responsible Director.

(v)	Finally, the cavalier approach of Mr Soualhi to the books and records of Rosegem, as detailed in his Affidavit of Discovery of 1st August, 1997, are the actions of a person who does not realise that the protection afforded by limited liability carries with it certain obligations which he clearly failed to discharge in not ensuring the safety of all the books and records of Rosegem, despite the fact that it had ceased trading.

	In conclusion, I have no doubt whatsoever that Mr Soualhi traded at a time when he knew that Rosegem and La Moselle were insolvent.  I am quite satisfied that he used monies due to the Collector-General and CCL to finance his trading activities and his travel.  I have little doubt that he was aware that Rosegem and La Moselle could not trade and at the 
same time discharge their liabilities to the Collector-General and CCL.  Such conduct was, in my view, improper conduct and if it was not to be described as actually dishonest it was certainly irresponsible.  Accordingly, I propose to make an Order declaring that Mr Soualhi shall not for a period of five years be appointed or act in any way whether directly or indirectly as a director or secretary or be concerned or take part in the promotion or formation of any company unless it meets the requirements set out in sub-section (3) of Section 150 of the Companies Act, 1990.