The High Court has refused to restrict Morgan McKeagney from acting as a company director, finding that he acted responsibly in his conduct of IQ Content Limited before and during its insolvency.
Mr Justice Jordan’s judgment, delivered on 8 May 2019, concerned a liquidator’s application under section 819 of the Companies Act 2014. The court had already made a restriction order against Paul Fitzsimons, the first respondent, on 28 November 2016, after he did not oppose the application. The contested issue was whether Mr McKeagney, the second respondent and a director when winding up began, had acted responsibly. The judge declined to make the requested declaration against him.
IQ Content, a web design and IT consultancy, went into liquidation on 2 July 2014 after a sudden collapse in revenue, cash-flow problems and growing tax liabilities. The liquidator did not allege dishonesty by the respondents. The judge said the question before him was Mr McKeagney’s responsibility, and that the respondent bore the burden of satisfying the court on that issue.
The judgment describes Mr McKeagney as having stepped down as managing director in September 2012 and later being sidelined from key decisions. Discovery documents supported his account that colleagues were planning a new “phoenix” company while he opposed that course and tried to preserve IQ Content and pay its creditors. The judge found that the company’s assets moved to Each and Other Limited in a near-seamless transfer, and described the sale as a murky transaction involving connected parties that fundamentally undervalued the business.
The judge found that colleagues obstructed attempts to reach an arrangement with Revenue, undermined efforts to maintain bank support and transfered projects and sales opportunities to the new company. He also accepted that the abrupt revenue collapse and a split in the executive team contributed to IQ Content’s failure. These findings formed part of the judge’s assessment of Mr McKeagney’s conduct; they were not a separate determination of liability against the other people described.
The court considered six areas raised by the liquidator, including moving employees to contractor status, tax on bonuses, the pay and car provided to Mr McKeagney’s former spouse, directors’ loans and the use of consultants. The judge found that Mr McKeagney made a mistake in approving the contractor-status change, but did not consider it irresponsible in the circumstances. He treated the bonus-tax issue as an error, found the evidence about the car inadequate to establish irresponsibility, and found that the loans had been repaid or did not show irresponsible conduct. The evidence did not establish that the consultants were improperly classified or connected to the insolvency.
The judgment concluded that Mr McKeagney had acted responsibly and with integrity. The court therefore declined the restriction sought against him. The judgment does not set aside or revisit the restriction order already made against Mr Fitzsimons.