The High Court has appointed Barry Donohue and Conor Pyne as joint liquidators of Marlboro Holdings (DGT) Limited, replacing Anthony J. Fitzpatrick, after finding that Allied Irish Banks PLC should not have been excluded from voting at a creditors’ meeting over its claim of €1,508,122.60.
In a judgment delivered on 12 July 2018, Ms Justice Costello ruled on the bank’s challenge to Thomas O’Driscoll’s decision, as chair of the 23 June 2017 meeting, to treat the bank’s debt as unascertained and give it no voting value. The meeting had nominated Fitzpatrick as liquidator. The court held that the bank should have been allowed to vote for the full value of its claim and that the two nominees it proposed should have been appointed.
The dispute arose after the company’s properties were sold and the proceeds applied against three loan facilities. The bank demanded repayment of the residual balances in October 2016. The company’s 2015 accounts, signed by O’Driscoll and another director, recorded substantial liabilities and said negotiations with the bank were ongoing. Those negotiations did not produce a settlement. When the bank later made a statutory demand for €1,508,122.60, the company’s solicitor disputed the calculation and sought details.
At the creditors’ meeting, no value was attributed to the bank’s claim. The other unsecured creditors listed totalled €28,961, of which €23,857 was owed to O’Driscoll, his wife and a fellow director. The chair ruled that the bank could not vote because its debt was disputed. The bank argued that its claim represented about 98 per cent of the company’s unsecured debt.
The judge found that the evidence showed, on the balance of probabilities, that the debt had not been settled or reduced to nil. She said a disputed debt should not simply be entered as nil in the directors’ estimated statement of affairs. The Companies Act 2014 did not specify how to value a creditor’s claim for voting at this kind of meeting, and the statutory voting provisions in section 698(5) to (10) did not apply to meetings under section 587. The court applied the approach in earlier appellate decisions: documentary evidence can support a voting value without finally deciding what is owed.
The court rejected objections that the bank needed leave to bring the case, had used the wrong procedure or had sought an order against a non-party. It held that the application was brought within the 14-day period under section 588(4). The judge concluded that an order could not be made under section 698(9), and instead appointed Donohue and Pyne under sections 588(4) and (5). The judgment determined the voting issue; it made no finding on any future dispute over the precise amount ultimately due.