The High Court has invalidated a creditors’ vote that appointed Paddy Mehigan as liquidator of Jim Murnane Ltd. and appointed Barry Donohoe instead. The ruling followed a finding that the chairman of the creditors’ meeting should have allowed creditor CNH Financial Services SAS to vote on the value of the debt it claimed.
The company entered voluntary liquidation after a members’ meeting on 27 February 2009. At the creditors’ meeting later that day, the chairman, Aidan Murnane, admitted CNH’s proof for €386,677, the amount estimated in the company’s statement of affairs. CNH disputed that figure and said it was owed about €1 million. Its representative nominated Donohoe, while the members had nominated Mehigan. Creditors voting on the admitted figures favoured Mehigan, €654,465 to €410,812.
CNH appealed the chairman’s rejection of its claimed debt and sought Donohoe’s appointment. The respondents maintained that the chairman had followed recommended practice by admitting the lower of the amount claimed and the amount the company considered due. The court considered Order 74, rule 71 of the Rules of the Superior Courts, which permits an appeal against a chairman’s decision on a proof for voting purposes and requires a disputed proof to be marked as objected to, with the creditor allowed to vote subject to the objection.
The judge held that, where the amount claimed exceeded the company’s estimate, there was a doubt and the chairman should have allowed CNH to vote on the value asserted by its representative. The judge said the rule concerned voting only: the decision did not finally determine the amount of the debt.
The evidence showed substantial disputes over CNH’s claim, including credits claimed by the company in relation to Case IH and New Holland debts. The judge said those disputes involved factual conflicts that could not be resolved on affidavit evidence in this application. The court therefore did not decide the debt’s final amount or whether the company was entitled to the disputed credits.
The judge declared the vote for Mehigan invalid. Although the court considered the expense of calling another creditors’ meeting unwarranted, it appointed Donohoe as liquidator under section 267(2) of the Companies Act 1963. The judgment said the appointment did not reflect any finding that Mehigan was unfit, or any adverse inference about Murnane’s personal debt or the company’s overdraft arrangements.