The High Court has ruled that Damien Gilson should be restricted from company management and that his sister, Glenda Gilson, should also face a restriction after failing to take reasonable steps to keep abreast of an insolvent company’s affairs.
In a judgment delivered on 30 July 2015, Mr Justice Gilligan considered an application by liquidator Gary Lennon concerning Gilson Motor Company Limited. The company was wound up on 14 March 2011 following a petition by the Revenue Commissioners. The court said it would hear further submissions on the form of the orders; the judgment does not specify their final wording or duration.
The liquidator alleged that Damien Gilson controlled the company’s finances and operations and that €375,600.20 in sales proceeds was paid into two bank accounts in his name in the ten months before liquidation. The court accepted the liquidator’s evidence about Mr Gilson. It recorded that he was not contesting the application and acceded to the request for an appropriate order against him.
Glenda Gilson argued that the application against her was brought late and that she had been a nominal director with no role in daily operations. The court rejected the delay argument, finding no suggestion of unfairness or prejudice. It accepted that she did not run the business, did not appear to benefit directly, and had no evidence-based connection to her brother’s alleged diversion of company funds.
However, she had signed the company’s 2006 and 2007 accounts in November and December 2008. Those accounts warned of doubts about the company’s ability to continue as a going concern and raised the possibility that an extraordinary meeting might be required. No such meeting was held, and the company continued trading. The court found that she failed to take an active interest in the company or reasonably endeavour to keep informed, despite her director’s duties. It said she had been deceived by her brother about the way he ran the company, but that did not excuse her failure to make inquiries.
The judge found the company insolvent and confirmed that Glenda Gilson was a director at the relevant time. He concluded that she had not acted responsibly and must face the restriction sought under section 150 of the Companies Act 1990. The judgment left the formal orders to be settled after further submissions.