The High Court has ordered EcoLegacy Ltd to be wound up after finding that the company was insolvent and that its creditor had not brought the petition for an improper purpose.
In a judgment delivered on 11 June 2018, Ms Justice Murphy found that the William Jay Gencarella Family Trust was entitled to a winding-up order as a creditor. She also directed the liquidator to investigate payments made by EcoLegacy to Tony Ennis, its former chief executive, and Brian McKimm, its former chief operating officer and acting chief executive.
The Trust petitioned to wind up the company, which developed the “ecoLation” technology, on insolvency and just-and-equitable grounds. EcoLegacy did not contest the substance of the petition or its insolvency, but argued that the petition was an abuse of process, alleging that the Trust sought to take control of the company or acquire its assets.
The dispute arose as EcoLegacy’s prototype faced technical problems, expected funding from Glasnevin Trust had not arrived, and the company had no confirmed sales. The judgment records that the Trust had advanced €750,000 in loan notes. The company lacked the funds to repay them, and the judge found there was no credible prospect of future financing to meet the debt.
The court heard allegations and counter-allegations that Ennis and McKimm had misappropriated company funds. The judge stressed that these remained allegations requiring investigation. She found no evidence that payments made by McKimm after a February 2017 board meeting were invalid, although those payments made the company’s insolvency more apparent. The court found the company was insolvent even without them.
The judge accepted the evidence of the Trust’s representative, William Gencarella, that his aim had been to save the company through better management and further investment. The court found that he used the loan notes as leverage during efforts to resolve the company’s governance crisis, and that the winding-up petition followed the rejection of a proposed restructuring and further funding plan.
The court concluded that EcoLegacy had not provided cogent evidence that the Trust’s underlying motive was improper or amounted to an abuse of process. It therefore granted the petition and ordered the winding up. The judgment does not make findings that either Ennis or McKimm misappropriated funds; it directs the liquidator to investigate the payments.