The High Court has replaced the liquidator of a company in voluntary liquidation after finding that the chair of a creditors’ meeting wrongly refused to allow a vote and wrongly excluded Premier Foods from voting.
In a judgment delivered on 24 October 2019, Mr Justice Allen appointed Aidan Garcia Diaz of Collins Garcia as liquidator of Duibhne Diltoir Loin Teoranta, instead of Conor O’Boyle of O’Boyle & Associates. The order was made under section 588(5) of the Companies Act 2014, following an application by the Revenue Commissioners.
The company, which sold cakes and confectionery, ceased trading in February 2019. At a meeting on 12 March to consider the liquidator, creditors representing €771,153 in admitted debts supported Shane McCarthy. The remaining creditors, including the company’s directors, were owed €758,408 and had proxies in favour of the chair, James Divney. Divney refused to hold a vote, saying the proxies conclusively supported the company’s nominee, O’Boyle.
Premier Foods had initially lodged a proxy in favour of the chair but withdrew it at an earlier meeting, after hearing questions and answers about the company’s finances. Its representatives attended the March meeting and indicated they supported McCarthy. The chair refused to let them vote because they had not produced a proxy.
Justice Allen found that this was wrong. A corporate creditor could act through an authorised representative or vote by proxy; producing a proxy was not a condition for acting through a representative. The chair could have reasonably required evidence of the representative’s authority, but had not done so. The court also noted that the email presented at the meeting was not itself a company resolution, but that did not justify excluding Premier Foods without first requiring evidence.
Had a vote been held with Premier Foods included, the meeting would have nominated McCarthy. The judge said that this was sufficient to persuade him that someone other than the company’s nominee should be appointed. He selected Garcia Diaz, as proposed by Revenue, noting that there was no objection to his appointment other than from the Divney directors.
The judgment also addressed other disputes. The court held that section 237, concerning evidential presumptions about director loans, did not apply to voting at a creditors’ meeting. The directors were entitled to vote their admitted debts without producing written loan agreements. The judge also found that the notice for the March meeting set an incorrect deadline for lodging proxies, but said it was unnecessary to decide the proxies’ validity after ruling on Premier Foods’ right to vote.
The court’s order replaced O’Boyle with Garcia Diaz. It did not appoint McCarthy, despite finding that the creditors would have nominated him if the vote had been allowed.