The High Court imposed a five-year restriction order on Sean Carberry, a former director of Greenmount Holdings Limited, after finding that his sale of the company’s shares for €1 to an undischarged bankrupt was irresponsible and showed a lack of commercial probity.
Mr Justice Brian McGovern delivered the judgment on 31 July 2007 in an application by liquidator James Stafford under section 150 of the Companies Act 1990. The proceedings concerned Ann O’Connor, Sean Carberry and Barbara Carberry. The fourth and fifth named respondents had already submitted to restriction orders and were not part of the court’s determination on these three respondents.
Greenmount operated serviced offices at the Harcourt Centre in Dublin and owned an investment apartment in the International Financial Services Centre. The court said falling rental income and a substantial rent increase were major factors in the company’s insolvency. The liquidator was appointed on 21 September 2005.
The court found that the company had failed to keep proper books of account and had not filed audited accounts after the year ending 30 June 2000. It accepted that Ann O’Connor and Sean Carberry had been in dispute and had made some attempts to regularise the company’s records. The court said it could not determine which was personally responsible for the accounting failures and made no restriction order against them on that ground. It also made no order based on the directors’ failure to function properly as a board.
The liquidator challenged a €130,000 payment to buy out Ms O’Connor, arguing the company was insolvent and lacked sufficient distributable reserves. The court was not entirely convinced that the company was solvent or had adequate reserves, but found that the directors had obtained professional advice that did not oppose the transaction. It made no restriction order over the buyout.
The court found the company was insolvent when Mr Carberry sold his interest for €1 to Michael Kelly, an undischarged bankrupt, in July 2005. It said the evidence suggested Barbara Carberry was not part of the decision and made no order against her over the sale. The court restricted Sean Carberry for five years, finding the transfer impeded an orderly winding down when the company was no longer viable.
The liquidator also alleged that Ms O’Connor caused Greenmount to issue invoices for Warsaw office space it did not own, for the benefit of another business. Ms O’Connor denied the allegation. The judge said the evidence was insufficient to impose a restriction order on that basis.