The High Court has replaced the liquidator of Mountview Foods Limited after finding that decisions at a creditors’ meeting distorted the vote on who should oversee the company’s voluntary winding up.
In a judgment delivered on 11 March 2013, Ms Justice Laffoy set aside the chairman’s decision to exclude a general proxy submitted by the applicant creditor, Animex sp. z o.o., and his decision to admit proxies for three other corporate creditors. She declared Eamonn Leahy liquidator in place of Anthony Weldon.
The dispute concerned the 14 January 2013 creditors’ meeting. Animex sought to vote for Leahy, its nominee, but its proxy was rejected because it had returned both general and special proxy forms. The judge said the company’s special proxy form was materially defective and could not be meaningfully completed. Although Animex had acknowledged mistakenly returning both forms, the company was responsible for sending out the flawed form, the judgment said.
The chairman also accepted proxies for three companies that did not meet the mandatory requirements for corporate proxies under the court rules. Their debts totalled €110,518. The judge found the chairman was wrong to admit those proxies. A fourth company’s proxy was conceded by Animex to have been probably properly executed.
The judge also found that the chairman had wrongly excluded two proxies submitted by fax for Polish companies Aviko BV and Sokolow SA. Their listed debts totalled €234,789. The court accepted that faxed proxies could satisfy the rules, but said there was not enough evidence to conclude with certainty how those companies would have voted.
The judgment’s vote calculations showed that, if Animex’s proxy had been admitted and the improperly executed corporate proxies excluded, votes for Leahy would have totalled €589,814 against €352,508. The court noted the uncertain effect of the faxed proxies, but said even if they had voted against Leahy, the vote against would still have been slightly lower than the vote for him.
Justice Laffoy chose to substitute Leahy directly rather than order another creditors’ meeting. She cited the predictable voting result, the company’s insolvency and the additional costs of holding another meeting. She said that had the meeting been conducted correctly, Leahy would have become liquidator under the statutory voting process.
The court ordered that Leahy replace Weldon. It will hear further submissions on how Weldon should be paid for work already carried out. The judgment also said the State should consider whether legislation needs clarification on outcomes where misconduct at a creditors’ meeting prevents the creditors’ nominee from being appointed.