The High Court has dismissed a petition to wind up Connemara Mining Company plc, finding that the petitioner had not established either that the company could not pay its debts as they fell due or that winding it up would be just and equitable.
In a judgment delivered on 10 May 2013, Ms Justice Laffoy held that Trampus Limited, a fully paid-up shareholder, had standing under Irish law to bring a petition on the grounds it relied on. The court nevertheless dismissed the petition after hearing it, concluding that neither ground for a winding-up order had been proved.
Trampus argued that the company’s interim report for the six months to 30 June 2012 showed a net current deficit of €80,000, and relied on the company’s audited accounts and an exploration update. It also argued that the company’s intangible assets could not be protected while its directors remained in place, citing legal proceedings in Dallas involving allegations against two directors. Those allegations concerned their conduct at another company; the judgment records that they were disputed and had not been established in this case.
The company opposed the petition, maintaining that it was solvent and could pay its debts. Its evidence pointed to intangible assets, the payment of liabilities other than directors’ fees, and the directors’ stated willingness to defer payment of those fees while cash was insufficient. The company also said it had chosen not to contribute to a joint venture’s exploration budget for commercial reasons, with a resulting dilution of its interest, rather than because it could not meet a debt.
Justice Laffoy said the relevant question was whether the company could pay its debts as they fell due when the petition was presented on 23 January 2013. The court found that Trampus had not discharged its burden of proof. It also found no evidence that the company would need to sell assets in the short or medium term to meet debts as they fell due.
On the just-and-equitable ground, the judge said a shareholder’s loss of confidence in the directors was not sufficient in the circumstances of a listed public company with more than 400 shareholders. The court was not satisfied that winding up was justified on the case made in the petition.
The petition was dismissed, ending the matter. The judgment also said the High Court does not make a winding-up order conditional on directors giving undertakings not to pursue accrued fees.