The High Court declined to make restriction orders against three former directors of M.K. Fuels Limited, finding that the concerns raised about their conduct did not establish that they had acted irresponsibly in running the company. The court also granted the liquidator an extension of time to bring the application.
The case concerned an application by liquidator Michael Cotter under section 150 of the Companies Act 1990, as amended, against Michael Gilligan, Anthony Kelly and Stanley Morrisson. Mr Justice Barrett delivered the judgment on 30 May 2014. The company, which sold and distributed liquid fuels and related products in the Sligo area, was incorporated in 2001. The liquidator was appointed on 29 April 2011.
The judge said there was no issue about the honesty of any of the three men, and no other ground for a restriction order apart from whether they had acted responsibly. The liquidator’s concerns covered cooperation with the liquidation, the sale of a company vehicle, payments to certain creditors, a director’s loan account and a claimed discrepancy in stock.
On cooperation, the court acknowledged that the directors might have handled their dealings with the liquidator better, but found any shortcomings were not serious enough to make their conduct irresponsible. It accepted Mr Gilligan’s explanation that the vehicle had been sold legitimately and documented, despite shortcomings in the paperwork. The evidence about supplier payments did not establish a creditor preference; the directors said switching suppliers brought more favourable credit terms.
The accounts showed a €225,000 director loan balance owed by the company to Mr Gilligan for the year ending February 2010, while a later statement of affairs recorded €85,000. The liquidator identified €101,000 in repayments during a period he said the company was in financial difficulty. The court accepted Mr Gilligan’s explanation that the money had been lodged to the company after his brother repaid a loan, and noted that repayments to him stopped around the end of 2010 when the company appeared to be in serious difficulty.
The liquidator estimated stock worth about €427,000 should have remained at winding-up, while the directors’ statement recorded none. The court accepted evidence that the company stopped buying supplies and sold its remaining stock to regular customers over about three weeks, lodging the proceeds in its bank account.
The court was therefore not satisfied that section 150 required a restriction order against any respondent and declined to make one. Separately, it granted the liquidator’s application to extend the time for bringing the case. The judge said that, given the court’s decision on the restriction application, refusing the extension would serve no purpose.