The High Court ordered Fencore Services Limited to be wound up under court supervision after finding compelling reasons for an independent investigation into a transaction involving a ship and a company owned by one of Fencore’s directors. It postponed appointing an official liquidator for one week so the petitioner could consider the court’s concerns about a proposed appointee’s possible conflicts.
Danske Bank A/S, trading as National Irish Bank, petitioned to wind up Fencore on 13 January 2010 over an unsatisfied demand for €5,686,143.60 in loan and overdraft debt. Fencore began a creditors’ voluntary winding up after the petition was presented, and creditors appointed Alan Fitzpatrick as liquidator. The bank maintained its petition.
The court’s decision turned chiefly on questions about the January 2009 arrangement between Fencore and Green Star Shipping. Green Star was wholly owned by Fencore director Noel Hanley. A document registered as a bill of sale appeared to record a transfer of the vessel M.V. Kilcoe, while Hanley said the arrangement was a five-year bareboat charter. The charter document allowed Green Star to change the vessel’s name and flag and provided for debts it paid on Fencore’s behalf to count as prepaid hire.
The bank questioned how the arrangement affected its mortgage over the ship and its security over charter earnings. It also questioned why Green Star had paid €2.9 million of Fencore’s debts when the charter hire over five years would total €1.8 million. Hanley disputed the bank’s account and said Green Star had paid historic liabilities exceeding the hire due. The judge did not decide whether the transaction was proper. She found that its facts and legal implications required investigation by a liquidator independent of Fencore’s members and Green Star.
The judgment also noted disputes about a €1 million debt claimed by Hanley’s partner, a €3.5 million insurance claim that the bank said had been dropped, and the value attributed to Fencore’s Bulgarian subsidiary, Varna. These were matters requiring investigation; the court did not determine their ultimate value or status. Bank of Scotland Ireland, whose debt was listed at €843,170 and which the court said had no formal security, supported the petition.
The judge said the evidence did not allow her to determine whether creditors representing a majority in value preferred a compulsory or voluntary winding up. She concluded that the voluntary process would not provide the bank with an adequate remedy, particularly given the need for an independent investigation and the likely court involvement. She ordered Fencore wound up by the court.
The judge recorded that the bank had no personal objection to Fitzpatrick’s integrity or ability, but was concerned about his prior involvement with Green Star. She also noted that the proposed official liquidator, George Maloney, had been appointed receiver over residential property securing guarantees from Hanley and Deirdre Hanley, and had previously been asked by the bank to review Fencore’s books. The court made no final appointment that day, postponing it for one week for the bank to consider those potential conflict concerns.