The High Court imposed the five-year restriction required by section 150 of the Companies Act 1990 on the two directors of Congil Construction Limited, which was wound up in April 2010. The court found it could not be satisfied that they had acted responsibly in the company’s affairs. It did not find dishonesty, and made no determination on individual allegations of reckless trading or fraudulent asset transfers.
Congil was a building contractor and a wholly owned subsidiary of Wolverlife Investments Limited. The respondents, a husband and wife, were its sole directors. The liquidator sought the restriction after reporting to the Director of Corporate Enforcement. He argued that the directors had allowed Congil to continue trading while insolvent and that its work in progress and other assets benefited the respondents and related companies, while Congil’s own creditors were left exposed.
The first respondent disputed that account. He said the company’s difficulties resulted from the collapse in property, construction and banking markets, and that the banks supported the steps taken. The court noted disputes over property valuations and accounting treatment, which had been heard on affidavit without a plenary hearing or expert evidence. It did not resolve each disputed transaction or allegation.
The court concluded that by at least the latter half of 2008, the company’s difficulties were apparent and it had no realistic prospect of trading out of them. Building activity had ended, no units were sold at the Claregalway site in 2008, and only one further sale took place there, in March 2009. The court found that, from at least autumn 2008, the directors should have taken steps to protect Congil’s distinct creditors. Instead, the company’s affairs were treated as part of a wider business serving the interests of the directors and related companies. Its unsecured trade creditors were owed €5.129 million at winding up.
The court described the case as borderline on irresponsible conduct, but said it was not satisfied that the directors had acted responsibly. It also rejected the second respondent’s non-involvement as a defence: a director who played no part in managing an insolvent company could not claim to have acted responsibly in its affairs. The court therefore imposed the five-year restriction on both respondents, as required by law.