The High Court has found Gary Lennon guilty of misfeasance in his role as liquidator of Chempro Investments Limited and ordered him to repay €861,484.87 to the company’s liquidation account.
In a judgment delivered on 26 November 2020, Ms Justice Butler ruled on an application by the company’s current liquidator, Eamon Richardson, under section 612 of the Companies Act 2014. The order addresses withdrawals Lennon made from Chempro’s accounts and paid to himself or Lennon Corporate Recovery Limited as purported fees and costs.
Chempro entered members’ voluntary liquidation in February 2012, when it was solvent, with more than €1.3 million in cash and debts of €30,000. The directors estimated liquidation costs at €9,533. The company had two shareholders: Malko Investments SA, with 33 shares, and Istifid S.p.A., with 67. A €410,851 distribution was made to Malko in October 2012, but no distribution was made for the 67 shares. The court noted that the company’s creditors had been paid before the first anniversary of the liquidation.
The judgment records that by July 2019, €854,804 had been withdrawn for Lennon or his company, with a further €17,010 paid in August and September 2019. Lennon’s solicitor told the court those later withdrawals were made in error. The judgment also records that Lennon held no members’ meetings and filed no statutory statements during his time as liquidator, and that his fees had not been approved by the company or the court.
Lennon relied on difficulties over the beneficial ownership of Istifid’s shares and his understanding of an indemnity from Istifid. Justice Butler accepted that the shareholding issue made the liquidation more complex, but found it did not justify leaving the distribution unresolved for years while continuing to withdraw substantial sums. The indemnity from Istifid did not authorize withdrawals from Chempro’s accounts, the court said. Lennon had not applied for court approval of his fees, and the judgment did not assess or approve them.
The court found the evidence established misfeasance and that the payments caused the company pecuniary loss. It deducted €9,533, the original estimated liquidation cost, from the amount sought and ordered repayment of the balance, €861,484.87.
A separate application seeking Lennon’s attachment and committal over allegedly incomplete delivery of company records was not decided in this judgment. The court extended the records order to include material held or formerly held by Lennon Corporate Recovery Limited and adjourned that application. It also allowed two weeks for Lennon to provide invoices; that direction was to assist with the records application, not to assess his fees.