The High Court has refused to restrict former Salesprint & Display Ireland Limited directors David Murphy and Irene Murphy, finding that the concerns raised by the company’s liquidator did not establish irresponsible conduct requiring a restriction order.
Mr Justice Max Barrett delivered the judgment on 13 January 2015 in an application under section 150 of the Companies Act 1990. The company entered voluntary liquidation on 28 August 2012 after a prolonged decline in business. The court said no allegation of dishonesty had been made against either director and found that dishonesty did not arise from the evidence.
Salesprint lost an annual Diageo contract in July 2010, reducing revenue by about €330,000 a year. The directors cut staffing and warehouse costs, sought new business and explored a sale of the company’s service contracts. A proposed transaction with a competitor ultimately brought in €150,000. The court said these efforts were commercially sensible, though they did not prevent the company’s decline.
The liquidator advanced five grounds for restriction: unpaid tax debts of almost €270,000; an allegedly overstated group debtor figure of just under €481,000 in the 2010 accounts; delay in convening a creditors’ meeting; director loans of just over €60,000; and a draft statement of affairs allegedly overstating the company’s position.
The court found that Salesprint had liaised with the Revenue Commissioners and agreed repayment arrangements, which failed as trading deteriorated. It did not find the directors had deliberately used tax liabilities to finance the company. The court also found no basis to require restriction over the 2010 accounts or the timing of the creditors’ meeting.
On the loans, the court lacked sufficient evidence to decide whether there had been a breach of section 31. It was satisfied that Ms Murphy received no loan. Mr Murphy had later put almost €54,000 of his own money into the company for wages and other expenses, leaving just over €6,000 outstanding. The judge criticised the loose handling of money in and out of the company, but said it did not amount to irresponsibility or dishonesty warranting restriction. The draft statement sent to creditor BBP Marketing Limited had been prepared in good faith from accounts available at the time and marked “Draft”, the court found.
The court concluded that neither director should be restricted. It acknowledged that Salesprint may have entered liquidation slightly later than it should have, but said the timing was difficult to pinpoint and did not make restriction just or equitable on the evidence before it.