The High Court dismissed a petition to wind up Balbradagh Developments Limited by court order, finding that the company’s creditors’ voluntary liquidation should proceed instead.
The petition was brought by Concloda Construction Ltd. after a demand for €264,655.88, comprising the balance due under an arbitrator’s award and the petitioner’s arbitration costs. The demand was served on 26 May 2008, and the petition was presented on 25 June.
The petition was initially due to be heard on 14 July. The petitioner’s counsel told the court that the company was arranging a creditors’ meeting to consider a voluntary winding up, and the hearing was adjourned for two weeks. At the meeting on 22 July, creditors voted by value to appoint Declan McDonald as liquidator rather than the petitioner’s nominee, George Maloney. The petitioner then continued with its court petition.
The petitioner argued that votes from three creditors connected to the company should be disregarded because their claimed loans, totalling €580,000, were allegedly exaggerated or largely fictitious. It also said concerns raised about the company’s statement of affairs and other matters required investigation under court supervision. The judge found the evidence did not justify concluding that the debts had been fabricated or inflated to secure McDonald’s appointment, and declined to disregard the connected creditors’ votes.
The judge did not determine the underlying allegations of wrongdoing. She said concerns raised at the creditors’ meeting could be investigated by McDonald during the voluntary winding up, including through his report to the Director of Corporate Enforcement. A committee of inspection, which included the petitioner and a former financial adviser, and the ability of a liquidator or creditor to apply to court were among the safeguards identified.
The court also considered the company’s serious insolvency and the likely greater cost and duration of a court-ordered liquidation. On the evidence presented, and assuming the statement of affairs was correct, unsecured creditors faced a deficiency of €985,031. The judge concluded that continuing the creditors’ voluntary liquidation was in creditors’ interests and dismissed the petition. The court did not appoint Maloney as liquidator or make a compulsory winding-up order.