The High Court refused an application to adjourn bankruptcy proceedings against James Farrell and Grainne Farrell and adjudicated both bankrupt. The orders had been made on 12 October 2020; Mr Justice Richard Humphreys gave his reasons in a judgment delivered on 6 November.
The petitions arose from a dispute among shareholders in Business Mobile Security Services Limited. The debtors held 58% of the company’s shares, and the petition was brought by a minority shareholder. An arbitrator made an award in the petitioner’s favour in February 2017 and awarded costs the following month. In June 2017, the High Court entered judgment for €315,000 to enforce the award. That judgment remained unsatisfied more than three years later, the court said.
The petitioner held a judgment mortgage over the debtors’ property in County Kildare. At the time of the petition, the property was valued at €385,000. Ulster Bank held a first legal charge of €235,000, while the petitioner ranked equally with another joint creditor for €286,000.
The debtors sought an adjournment, relying mainly on an appeal against a Circuit Court refusal to grant relief under section 91(3) of the Personal Insolvency Act 2012. Their counsel also argued that the court had to consider alternatives to bankruptcy and that adjudication would have serious consequences for Grainne Farrell, who lived at the property. He described the petition as vindictive rather than commercial.
Humphreys rejected that characterisation, finding the petition was an attempt to enforce the unsatisfied High Court judgment and that improper purpose had not been demonstrated. He said the debtors had multiple opportunities to explore alternatives to bankruptcy and their delays in making applications weighed against further delay. The judgment also noted that a Circuit Court judge had refused the section 91(3) application and considered it unjust and unfair to delay the petitions further.
The High Court said it had considered alternatives to bankruptcy and that the serious consequences for the debtors did not, in the circumstances, justify refusing adjudication. It found the conditions for bankruptcy had been met. The court refused the adjournment and adjudicated the debtors bankrupt. It did not determine the pending appeal; the judgment said that appeal would become moot if the bankruptcy application succeeded.