The High Court removed the voluntary liquidator of Ballyrider Limited, finding that the company’s winding-up had not been conducted efficiently or cost-effectively and that the applicant had shown cause for removal. The court did not order the termination of the company’s proceedings against the first buyer of its hotel; it said a new liquidator should arrange an independent assessment of the claim and decide what best served the liquidation.
The Revenue Commissioners, a preferential creditor, applied for directions under section 280 of the Companies Act 1963. They also challenged costs and remuneration under section 281 and sought the liquidator’s removal under section 277. The company, which owned the Hazel Hotel in Monasterevin, entered voluntary liquidation in November 2010. The hotel was sold in 2011 after an earlier auction sale fell through.
The liquidator had sued the first buyer in January 2012, seeking damages based on the difference between the initial agreed price of €630,000 and the eventual hotel sale price of €479,000. The court noted that, more than three and a half years later, the claim had reached only the stage of a motion for judgment in default of defence. Before issuing it, the liquidator had not obtained written legal advice on the claim’s viability or assessed whether the buyer could pay a judgment. The court also noted the failed sale had been attributed to the buyer’s inability to raise the purchase funds.
The court said the liquidator was not legally required to consult the Committee of Inspection before bringing proceedings, but a prudent liquidator would have done so in these circumstances. It considered that the claim used funds otherwise available for distribution and that there was serious doubt about recovery. Rather than stop the proceedings, the court directed that their merits be independently assessed by a new liquidator.
The court also found that the liquidator had exposed the liquidation to unnecessary legal costs by retaining a solicitor on a time basis without first obtaining a section 68 letter setting out expected fees. It directed that the amount recoverable for the conveyancing work be assessed by reference to the set-fee or percentage basis applicable in 2011. It further directed that the cost of a later report commissioned by the liquidator to support his conduct, and the costs of taxing legal fees already paid, should not be charged to the liquidation.
The court did not set the liquidator’s overall remuneration. It said that decision should await proper, detailed accounts, including disclosure of work done for secured creditor Allied Irish Banks. The court concluded that the applicant had established that the liquidation’s interests required the liquidator’s removal.