The High Court confirmed a modified rescue scheme for Quesada Developments Limited, which operates Beechpark Nursing Home and Convalescent Centre in Dunmurry West, Co. Kildare. The court said the company had a reasonable chance of survival and that the scheme’s process for resolving disputed directors’ loans was sufficiently robust.
The judgment, delivered by Ms Justice Baker on 21 December 2017, followed a confirmation hearing on the examiner’s proposals. Two directors and shareholders, Brendan O’Hanlon and Dermot McSherry, opposed the scheme. The company was insolvent and employed 56 people. The judgment said the nursing home was well run and provided a high standard of care.
The scheme provides for a €150,000 investment by Daleland Limited, a company controlled by Ryan’s wife. It also cancels existing shareholdings and provides for O’Hanlon and McSherry to resign as directors. In a related transaction, Daleland agreed to buy the freehold of the nursing home premises from the receiver and grant the company an occupational release.
A central dispute concerned whether directors owed money to the company or were creditors themselves. The examiner could not determine the accounts, and the parties gave sharply different figures. Justice Baker said she took no view on the correct amounts. Under the modified scheme, an expert will determine the liabilities, if any, of the three directors and whether any is a creditor. Any amount found owing must be paid within 24 months, and sums recovered may fund an additional dividend for creditors.
O’Hanlon and McSherry argued that the arrangement would let Ryan take control while avoiding accountability for alleged wrongdoing. McSherry also challenged the investment process and argued for liquidation. The judge accepted the examiner’s evidence that the bidding process was conducted openly and that McSherry withdrew from bidding. She said the scheme’s expert review and regulatory oversight addressed the loan dispute sufficiently for confirmation.
Justice Baker added that the company would initially pay the expert’s costs, but could seek contributions from any director in proportion to the liability the expert finds against them. She also said she would receive Ryan’s undertaking not to act, or seek to act, as a director or shadow director of the company for two years.
The court rejected O’Hanlon’s proposal for a further 30-day standstill and said it was too late to incorporate. The judgment states that the modified scheme was to be annexed to the order confirming it.