The High Court has restricted Brian Stenson and David Stenson from acting as company directors or secretaries for five years, unless a company meets the conditions in section 819(3) of the Companies Act 2014. The order followed an application by the liquidator of Winning Ways Limited, a wholesale pet-products business that was wound up in August 2016.
Mr Justice Quinn found the directors had not proved that they acted responsibly in the company’s affairs. He made no finding of dishonesty. The restriction application concerned the directors’ conduct before the winding up; the judgment did not impose a general ban on their involvement in companies that meet the statutory requirements.
The company lost a major supply arrangement in December 2014, when Royal Canin began supplying the MaxiZoo retail chain directly. The judgment records that this contributed to a fall in annual sales from about €6.1 million in 2014 to €3.6 million in 2015. The company made losses for four consecutive years, and its 2015 accounts showed a deficit in shareholders’ equity of €185,703.
The directors signed those accounts in July 2015. The judge found that, by then at the latest, they knew the company was insolvent and that its losses were continuing. It continued trading for more than a year before ceasing business and entering liquidation in August 2016. The directors said they were trying to secure new business and had taken professional advice. The judge found the evidence of those efforts and advice too general to show that they had responsibly addressed the company’s deteriorating position or protected creditors’ interests.
The judgment also considered payments made while the business was struggling, including rent to the directors and contributions to their pension schemes. The judge said the evidence did not clearly establish an unfair preference in favour of the bank under section 604. However, continued trading allowed substantial payments to the bank, the directors’ rent and their pensions to continue while the company accumulated further losses and creditor debts.
Other complaints did not independently establish grounds for restriction. The judge accepted that omissions and stock valuations in the estimated statement of affairs were not dishonest, found the evidence insufficient to show the directors deprived the company of resources by serving Pet Zone, and said the company’s limited tax payment failures were not grave enough in the circumstances to show irresponsibility. The liquidator’s original complaint about unpaid wages was not maintained: employees had been paid their salaries, though minimum notice and holiday pay remained outstanding.
The court therefore made a declaration under section 819 against each director. It did not order compensation or determine any separate claim for unfair preference.