The High Court has ordered David Long and Gerry Wright, directors of Dublin Sports Café Limited, to be restricted for five years from acting as company directors or secretaries, or taking part in forming a company, unless it meets statutory capital requirements.
In a judgment delivered on 21 December 2005, Mr Justice Michael Peart found that both men acted honestly. But the court was not satisfied that they had acted responsibly in the company’s affairs overall, as required to avoid a restriction order under section 150 of the Companies Act 1990.
The company operated a licensed premises on Parnell Street, Dublin, with a pub, bar, disco and off-licence business alongside a lap-dancing operation. The liquidator said it had accumulated a deficit of about €2.4 million by the time he was appointed. He attributed the collapse to business failure linked to the premises’ location, but raised concerns about missing records, particularly for the lap-dancing business.
The liquidator’s evidence was that the lap-dancing operation took substantial receipts in cash, but there was little documentation showing how that money was recorded or spent. He said he could not trace the cash receipts or reconcile some lodgements with sales. The records supplied included 13 daily “Dance Sheets” for dates in April and June 2003.
Long said records had been kept, but some were seized by gardaí during a June 2003 raid and others were with a staff member for processing. He said cash receipts were divided between dancers and business expenses. Wright said he had been a non-executive director, had considered the accounts and believed the company could trade through its financial difficulties. Both men said they had acted honestly and responsibly. They also attributed gaps in audited accounts and annual returns to a dispute with the company’s auditors over fees.
The judge accepted that the pub and off-licence side had a part-time bookkeeper who kept detailed, up-to-date records. He found the available records for the cash-based business inadequate and said the explanations about missing material and the garda raid did not satisfy the court. He also rejected the auditors’ fee dispute as an adequate explanation for the missing audited accounts and unfiled annual returns.
The court found no evidence that the deficient records caused the company’s collapse, but said that did not resolve whether the directors had acted responsibly. As the statutory test was not met, the judge made the restriction order against both respondents. The judgment states that the restriction applies for five years, subject to the statutory requirements; it does not give further details of any separate conditions.