The High Court declined to make a restriction order against Eoghan Breslin, a former director of Shellware Limited, after finding that the concerns raised about his conduct did not establish that he had acted irresponsibly. The court also granted the liquidator an extension of time to bring the application.
The application was brought by Declan Taite, Shellware’s official liquidator, under section 150 of the Companies Act 1990. The court said there was no issue about Breslin’s honesty and no other ground for a restriction order; responsibility was the only substantive question left to decide.
Shellware designed and manufactured exhibition and presentation stands and carried out interior design and pub fit-outs. It began trading in June 1999, stopped trading in January 2009 and was wound up by court order that month. The judgment described the company’s decline as following the sudden contraction in the Irish economy in 2008.
The concerns considered included company records, unpaid taxes, decisions made during financial difficulty, payments involving related companies, use of company credit cards and cooperation with the liquidator. Shellware had kept comprehensive accounts, but its last audited accounts covered the year to June 2006. Breslin said in affidavit evidence that he considered an audit for 2007 imprudent because liquidation appeared imminent. The judge said the decision could be criticised but was not enough to amount to irresponsible conduct.
The company had a history of late tax payments and did not pay some Revenue liabilities near the end. The Revenue Commissioners brought the winding-up petition. The court found no evidence that Breslin had withheld tax payments to keep the business operating. It also found he had sought new business, engaged with trade creditors, obtained professional advice and liaised with Revenue when the company encountered difficulty.
The judge identified payments involving related companies as the greatest concern. Nerano Bars Limited, of which Breslin was also a director, was Shellware’s principal debtor from July 2006 to September 2008. Shellware continued trading with it before it entered examinership and paid some amounts Nerano owed, despite having no legal obligation to do so. Shellware also paid amounts owed by Birchport Limited, another company Breslin directed. The court accepted that the companies’ boards could have acted prudently in their own companies’ interests and found no evidence that Breslin crossed the line into irresponsible conduct.
The court also found that Breslin’s use of Shellware credit cards was not irresponsible and that he had substantively cooperated with the liquidator. It therefore declined to make the section 150 restriction order.
The liquidator separately sought more time under section 56(2) of the Company Law Enforcement Act 2001. The court said that waiting for the Director of Corporate Enforcement to grant relief would not always justify an extension, and noted that liquidators should apply to the High Court in advance if timing is likely to be difficult. In this case, because the court had already found that no restriction order was merited, it granted the extension sought.