The High Court has ordered Warren Logan and Dolores MacKenzie, directors of Hairspray Wholesalers Limited, to be subject to five-year restrictions on acting as company directors or secretaries, or taking part in forming or promoting a company, unless the statutory conditions in section 819(3) are met.
Mr Justice Allen made the order on 30 April 2019 in an application by liquidator Jim Luby under section 819(1) of the Companies Act 2014. The court was required to make a restriction declaration unless satisfied that the directors had acted honestly and responsibly, cooperated as reasonably expected with the winding up, and that no other reason made restriction just and equitable. The judge said there was no suggestion of dishonesty and acknowledged that the directors had engaged with the liquidator. The application turned on responsibility for the company’s affairs.
Hairspray Wholesalers, incorporated in 2010 to distribute hairdressing and beauty products, entered members’ voluntary liquidation in May 2013. Its directors’ declaration of solvency estimated a €54,283 surplus, including stock expected to realise €425,000. The court heard that the company had filed no annual returns or financial statements before the liquidation and had not kept proper books and records. Its VAT liability, shown as €13,062 in the statement of affairs, was later calculated by liquidator Gary Lennon at €251,164; the directors’ accountants, Guardian Management Accounting, calculated it at €296,235. The judge also referred to evidence that the company’s VAT liability over its trading period was calculated at €341,214 by Lennon or €386,275 by Guardian.
The missing records left liquidators unable to reconcile the stock or verify transfers between related companies. Stock estimated to realise €425,000 produced €36,542 in sales recovered by the liquidators. The directors said some stock had been transferred to Henry Street Hairspray Limited, which allegedly owed the company €102,489. The judge found that transfer and the claimed liability had not been adequately explained. The declaration also listed €431,655 in directors’ and related loans; Logan said he could not explain that figure, while later claims were substantially lower and unsupported by adequate records.
The directors argued that they had relied on professional advisers and blamed deficient accounting work, the liquidators’ conduct and fees for the company’s insolvency. The judge concluded that relying on advisers did not remove the directors’ continuing responsibility to ensure records, returns and accounts were maintained. He found they knew the records and filings were deficient, yet did not address those problems before liquidation. The court was not satisfied they had carried out the full inquiry needed to conclude the company could pay its debts within 12 months. It found the failure to identify and pay Revenue liabilities contributed directly to insolvency and held there was no basis to treat the two directors differently.
The court therefore made the restriction order sought against both respondents. The judgment does not state that they were disqualified from all company activity: the order permits the specified roles and activities where the company meets section 819(3).