The High Court has refused to prevent the Revenue Commissioners from seeking to wind up Troon Developments Limited over an acknowledged tax debt of more than €2.3 million.
Revenue had issued a final demand in February 2009 for €2.68 million in tax arrears. A further statutory demand in June sought €2,370,512.05, comprising VAT and interest, and warned that a winding-up petition could follow if payment was not made within 21 days.
Troon did not dispute that the tax was owed. Instead, the building company said it could not pay because proceeds from sales of units at a Cork Street development in Dublin had allegedly been wrongly paid to its lender, First Active plc, by its former solicitors without retaining the VAT element.
Troon had borrowed €22 million from First Active. It subsequently brought Commercial Court proceedings against the lender and the former solicitors, seeking recovery of the disputed sale proceeds. It argued that Revenue should wait because a successful outcome there could provide the money needed to clear the tax debt.
Miss Justice Laffoy rejected that argument. She found that Revenue was an undisputed creditor with standing to bring a winding-up petition. Because Troon had failed to satisfy the statutory demand within 21 days, the company was deemed insolvent for the purposes of the Companies Act 1963.
The court distinguished earlier cases in which winding-up petitions had been restrained or postponed because of ulterior purposes or unusual creditor disputes. No such motive was alleged against Revenue here. Its purpose was simply to recover an acknowledged VAT debt which was continuing to accrue interest.
The judge also said the outcome and financial consequences of the separate Commercial Court proceedings were uncertain. Even a successful claim did not establish that Revenue would necessarily be paid.
The injunction application was therefore refused. By the time judgment was delivered, Troon had indicated that it was no longer seeking to restrain Revenue because it could not provide security for costs in the Commercial Court case.