The High Court has made restriction orders against both directors of MJBCH Limited, finding that their handling of company records was not responsible. The court said the records’ inadequacy left significant payments and insurance proceeds unexplained, making it difficult for the liquidator to establish how the company’s affairs had been conducted.
Mr Justice Binchy delivered the judgment on 8 March 2016 in an application brought by the company’s official liquidator, Declan Taite. The company operated the Ballsbridge Inn and Towers Hotel and the Ballsbridge Court Hotel. It was wound up after a bank syndicate demanded payment of more than €262 million under a guarantee given by the company for loans to D.C.D. Builders Limited. The judge found that the guarantee demand triggered the company’s insolvency and that the directors were not responsible for that development.
The court found that the company had failed to maintain statutory books and records, including its share register and minute book. No annual return had been filed after April 2010, and its most recent audited accounts were for the year ended July 2009. The judge also found that significant receipts and payments after trading ceased were not recorded in the company’s books. These included four payments to Amrakbo totalling €846,440, made on the same dates as lodgements totalling €808,278. The court said no explanation had been given for why those payments were not recorded.
The liquidator had raised concerns about payments to Amrakbo and Mavior, companies connected to the respondents, and about the company’s insurance claim following flood damage at the hotels. The first respondent said the Amrakbo payments related to reinstatement work and that payments to Mavior included fees under a consultancy agreement. He also said the company received €1.3 million for business interruption. The second respondent said the bank syndicate had prevented the company from continuing a substantial business interruption claim. The court found that it remained unclear whether the company received a separate €1.3 million payment, how any such money was accounted for, and why nearly €250,000 was spent on tenant improvements shortly before the leases ended. It made no firm finding on those unresolved matters and said that was unnecessary for the application.
The judge said the second respondent offered no cooperation or assistance to the liquidator. The first respondent provided significant documentation and corresponded extensively, but the piecemeal delivery of records was unsatisfactory. The court concluded that both directors’ failure to maintain proper records went beyond technical breaches and meant their conduct could not be regarded as responsible. It therefore ordered restrictions against each under section 819(1) of the Companies Act 2014. The judgment does not specify a separate term for the orders.