The High Court ruled that a creditors’ meeting in the voluntary liquidation of CED Construction Limited was inquorate because the company’s only creditor, Winthrop Engineering and Contracting Limited, was not properly represented. It ordered the meeting to resume no later than 29 July 2011.
The ruling followed an application by Winthrop challenging the handling of the 15 June 2011 meeting. At an earlier members’ meeting that morning, Barry Forrest had been appointed liquidator. At the creditors’ meeting, Winthrop director Barry English proposed Steven O’Halloran as an alternative, but chairman Micheal Heneghan declined to accept the nomination. He said no proxy had been received and that O’Halloran’s written consent was unavailable.
Justice Laffoy found that Winthrop was entitled to attend and vote as a creditor, but had not met the statutory and procedural requirements for representation. It had neither produced the required authority for a corporate representative nor lodged a valid proxy by the deadline. The court also held that O’Halloran’s written consent needed to be available at the meeting for a liquidator nomination to take effect under the relevant provisions. The consent was obtained later, but that did not cure the failures at the meeting.
The court rejected Winthrop’s requests for declarations that it had been properly represented, that its nomination was valid, or that O’Halloran had become liquidator. It also did not decide to remove Forrest or appoint O’Halloran. The application to remove Forrest had not been argued on the basis required for the court’s discretionary power, and the judge said it would not be appropriate to consider removal if his appointment at the meeting stood.
However, because Winthrop was the sole creditor and was not represented through one of the permitted routes, the meeting lacked a quorum under Order 74, rule 66. The judge said the chairman had a secondary duty to check whether a corporate creditor was properly represented and to ensure the meeting was quorate. The meeting therefore should have been adjourned.
The judgment noted potential disputes involving Winthrop’s claim against CED Construction and claims or counterclaims involving First Ireland Limited, which was identified as CED Construction’s debtor. Winthrop had claimed €37,457 as an unpaid invoice balance and separately sought €175,392.52 in damages in plenary proceedings. The court said other remedies available to a creditor did not excuse failure to conduct the meeting according to law.
The court reserved costs for submissions. It observed that Winthrop’s failure to arrange proper representation was the primary reason the application became necessary, while also finding that a properly performed chairing role would have led to an adjournment and avoided the proceedings.