The High Court refused to confirm rescue schemes for Eylewood Limited and Woodman Inns Limited after ruling that a proposed investor’s funding commitment was not binding on the terms required. The court also said it would hear the parties on any further orders, including whether the companies should cease to be under court protection.
The companies, which operate licensed premises in Waterford, are wholly owned by Tweedy Group of Bars Limited. Barrowville Estates Limited had agreed to invest under schemes proposed by examiner Kevin Hughes. During a three-day confirmation hearing, the proposals were modified and Barrowville offered an additional €500,000 in working capital.
A central dispute concerned the rights of Robert Tweedy and Anne Tweedy under personal guarantees of company debts. The examiner and Barrowville argued that section 25A(1)(d) of the Companies (Amendment) Act 1990 limited the guarantors’ rights to recover from the companies after paying creditors. The Tweedys argued that their rights to indemnity and subrogation were not limited in that way.
Justice Finlay Geoghegan held that section 25A(1)(d) did not limit those rights to the payments provided for in the schemes. She said guarantors with contingent rights to indemnity could be treated as contingent creditors and that their position could be addressed in a scheme. However, the examiner had not included the Tweedys as contingent guarantee creditors in these proposals.
Barrowville had said it would waive a separate condition in its investment agreement only if the guarantors’ rights were limited as the examiner and investor contended. Because the court rejected that interpretation, it found there was no binding commitment to invest. Without funds to support the schemes, the court refused confirmation of both proposals. It did not consider the other objections to confirmation.
The judgment also concluded that a scheme may provide for a member’s shares to be transferred compulsorily, subject to the court being satisfied that the proposal is fair and equitable and not unfairly prejudicial to the member. The court did not decide whether the proposed share transfers in these schemes met that test, because it refused confirmation on the funding issue.
The judgment noted concerns about the directors’ cooperation with the examiner, while recognising the Tweedys’ right to object as guarantors and contingent creditors. The court made no final order in the concluding paragraph on ending court protection; it said it would hear the parties on whether to make that and any other additional orders.