The High Court has ruled that two former directors of Panshire Limited cannot challenge the appointment of the company’s replacement liquidator, finding that their challenge came too late and was barred by their conduct. The decision resolved a preliminary issue only; the court did not decide the parties’ wider disputes over the company’s finances or the validity of the appointment on the other grounds argued.
Panshire was set up to develop Clearstream Court in Finglas. It entered voluntary liquidation in 2010, and John Barry was appointed liquidator. After Barry resigned, Aidan Garcia was purportedly appointed in his place at a creditors’ meeting on 2 August 2011.
The company’s liquidator and Panshire brought the main proceedings against the two former directors, Mark Kilkenny and Patrick Rooney, and Danske Bank. They allege, among other things, that company money was diverted to pay the directors’ personal borrowing, two apartments were transferred for no consideration, and the company is entitled to a share of proceeds from apartment sales. The directors contest those claims. The High Court said the main case was expected to proceed to a full hearing.
In January 2015, the directors challenged Garcia’s appointment, saying they were creditors and had not been given notice of the 2011 meeting. The court recorded that the available evidence included a public notice of the resolution and filings with the Companies Registration Office. It also found that the directors knew by November 2011 that Garcia was acting as liquidator, and thereafter dealt with him in that capacity. The judgment said the meeting appeared to have been quorate and conducted in compliance with the Companies Acts, while noting that there was no evidence the directors had been sent notice.
Justice Haughton held that the challenge had not been brought within a reasonable period. He found that the directors had engaged with Garcia over several years, sought his assistance as liquidator, and allowed him to continue work and incur expenses before raising the appointment issue. The court also found their conduct showed a shared assumption that Garcia was validly appointed, making it unconscionable to let them later deny it.
The court therefore answered the first preliminary issue against the directors: they were prevented by delay and/or estoppel from challenging the appointment. It treated Garcia’s appointment as valid and subsisting for the purposes of the main proceeding. Because that answer disposed of the preliminary issue, the court did not decide whether the directors were creditors on 2 August 2011, whether there was a separate legal basis to invalidate the appointment, or what consequences would follow from any failure to give notice. The main claims remained for later determination.