The High Court has ordered Allied Irish Banks plc (AIB) to repay sums it paid from the in-credit account of MB Refrigeration and Air Conditioning Ltd after 18 September 2013, when the court found the bank had actual notice that the company was being wound up. Interest is also due from the date of each payment until repayment, subject to an exception for certain preferential creditors.
The ruling was made by Mr Justice Max Barrett on 21 December 2016 in an application brought by the company’s liquidator, Mr Walsh. The company had been wound up following a petition presented on 13 August 2013. Mr Walsh sought declarations and repayment in respect of transactions on an AIB account between 13 August and 4 October 2013.
The court considered whether the application should proceed under section 218 of the Companies Act 1963, which had been repealed, or the corresponding section 602 of the Companies Act 2014. It decided to apply section 602, using the transitional provisions in the 2014 Act.
The court found that payments out of the company’s consistently in-credit account reduced its assets and therefore were dispositions of company property under section 602. AIB said it first became aware of the winding-up application on 18 September 2013. The court accepted that date as the point from which AIB had actual notice that the company was being wound up.
Payments made up to and including 17 September 2013 were held valid, and AIB was not liable for making them under section 602(3). The court held that impugned payments made on or after 18 September were void. AIB must repay those sums, with interest from each payment date until repayment, except where a sum went to a preferential creditor and Mr Walsh is satisfied that the creditor would have received the same payment as part of the liquidation proceeds.
AIB had also argued that some payments were made to preferential creditors, directors or trade creditors in the ordinary course of business. The judgment records those points as AIB’s position. Its repayment order provides the stated exception for qualifying preferential-creditor payments; it does not specify the individual payments or total sum to be repaid.