The High Court has made declarations restricting three former directors of College Freight Limited, which traded as Target Express, from acting as company directors or secretaries or taking part in forming or promoting a company unless it meets statutory requirements.
In a judgment delivered on 11 March 2016, Mr Justice Tony O’Connor ruled on applications brought by the company’s joint liquidators under section 150 of the Companies Act 1990. The court was required to make the declarations unless satisfied that the respondents had acted honestly and responsibly. It was not so satisfied and found no acceptable reason to withhold the restrictions sought.
The respondents were directors when the company went into liquidation. The court said the freight business had faced economic pressures from 2009. Bank of Scotland withdrew its invoice-discounting arrangements at the end of 2011. A replacement facility from Close Invoice Finance involved security over the company’s book debts and a charge over the family home of two respondents. The home was later sold, and they paid €250,000 to settle Close’s proceedings to realise the security.
The judgment raised questions about the company’s debts and its dealings with Revenue. The company estimated book debts of about €5.873 million when the liquidators were appointed, while Close found €2.596 million uncollectible. The court said the respondents had not satisfactorily explained the disparity or how long the company traded while insolvent. It also found the incorrect PAYE and PRSI returns for 2011 had not been explained, and there was no coherent reason for missing an instalment under a Revenue agreement in July 2012.
That agreement covered a company liability of €796,642.08, payable over nine months from 31 May 2012. Revenue issued an attachment order for €151,000 on 23 August 2012. The company then lacked funds to pay staff wages the next day and ceased trading on 27 August.
The court also criticised the statement of affairs, which it said did not accurately reflect the company’s position. It recorded that the liquidators estimated an overall deficit exceeding €5.5 million, compared with a surplus of nearly €224,000 shown in the statement. The court said the absence of records and vehicles made it harder for liquidators to identify and safeguard company assets, and found the respondents had not shown they had reasonable measures to identify and secure the vehicles.
The judge said each respondent had an independent duty to question the company’s viability and solvency after 2009, safeguard assets for creditors, comply with Revenue requirements and assist the liquidators. The declarations followed. The judgment added that post-liquidation conduct was only a small factor in the decision.