The director of Rare Earth Metal Exchange Limited (REME), Mr. Elisha Zinyama, was disqualified from acting in this position following a failure to deliver. Mr. Zinyama had specifically failed to procure metals which has been agreed to be purchased on behalf of the company’s clients between September and December 2012. REME is a company that specializes in the provision of rare earth metals. It was incorporated in February 2012, but by December of the same year it had went into creditors’ voluntary liquidation. The disqualification granted to Mr. Elisha Zinyama is for a period of 10 years. During this period he will not be allowed to act as a director of the said company. He will also be prohibited from taking part, neither directly nor indirectly, in the formation or management of another company or limited liability partnership. He is also prohibited from being a receiver of any company’s property, or act as an insolvency practitioner.
This disqualification followed an investigation carried out by the Insolvency Service’s London Team. The disqualification period commences as from 1st July 2015.
When REME went into voluntary liquidation three years ago, it had a total of £2,888,878 in unfulfilled orders. This is a staggering amount to owe to clients, and naturally it was the spark that led to the disqualification order, as Mr. Zinyama was responsible for this as a director. As a Chief Investigator at the Insolvency Service commented, Mr. Zinyama was obliged to conduct business in a way that would lead to the proper fulfilment of orders placed by REME’s clients. It is the Insolvency Service’s responsibility to take action in cases such as this, when a director acts below his/her standards.
REME’s total assets at the date of liquidation amounted approximately £110,000. There were total claims of £3,617,702. Thus the estimated overall deficit amounted to some £3,500,000.
During the Insolvency Service investigation it was discovered that REME had received some £1,944,597 in orders for rare earth metals. This was for 1374kg. However, it had failed to allocate stock against 760kg, which amounted to £783,703. There were 310kg, that is, £303,350 that were over 28 days from receipt. Thus it was evident that REME was breaking its terms and conditions.
Moreover, by the 17th September 2012, it was found that REME held 760kg of bonded stock, as well as 250kg of non-bonded stock. The latter was found to be counterfeit. Despite this, REME still continued to take new orders from clients. In fact between the 18th September 2012 and the date of its liquidation, REME took a further £880,645 from clients for sales of rare earth metals. Despite that, the company did not purchase any additional stock so as to be able to meet the orders.
Considering the whole fiasco, no wonder the director was given this disqualification order. Let us hope the Insolvency Service will continue to take care of similar situations so as to safeguard customers.