The High Court dismissed Vincent Callan’s petition to have Permanent Formwork Systems Limited wound up by court order, allowing the company’s creditors’ voluntary liquidation to proceed.
In a judgment delivered on 23 May 2007, Miss Justice Laffoy said the winding up was inevitable because the company’s members had passed a resolution for a creditors’ voluntary winding up on 21 May. Under section 233 of the Companies Act 1963, the winding up was deemed to have commenced on that date. The question for the court was whether to replace that process with a court-supervised winding up.
Callan, a former director and managing director of the company, claimed it owed him €157,000, plus interest. The company had acknowledged that sum in a January 2007 letter, but claimed it could deduct €98,240.67 relating to work by Offsite Construction and Design Limited and €51,660.74 in withdrawals allegedly authorised by Callan. The company said these sums were owed by third parties and sought to treat them as amounts recoverable from Callan for alleged breach of fiduciary duty.
The judge said the evidence did not establish substantial grounds for the company to claim those amounts from Callan. However, she described that conclusion as academic because the winding up had already begun. She also recorded the petitioner’s concerns about the timing of the creditors’ meeting, the proposed liquidator’s independence, creditor connections and the loss of a special priority for costs. Those were submissions, not findings that the proposed liquidator lacked independence.
The court had been told by counsel for four creditors that they represented 86% in value of creditors, but no evidence was provided about the number or classes of creditors or the amounts owed. The judge said that was unsatisfactory. She also expressed concern that the company had previously asserted it was solvent but its director’s affidavit responding to the petition did not address solvency.
Despite those reservations, the judge concluded that dismissing the petition was in the interests of creditors as a whole. She considered a court-supervised winding up would probably be more costly and take longer. She found no question had arisen about the independence of the insolvency practitioner expected to be confirmed at the creditors’ meeting, and no need for the kind of independent investigation ordered in another case. The petition was dismissed; the judgment did not make a court winding-up order.