The High Court declared Paul Davis subject to a five-year restriction on acting as a director or secretary, or taking part in forming or promoting a company, unless it meets statutory requirements. The declaration followed an application by Club Tivoli Limited’s liquidator under section 150 of the Companies Act 1990. The court did not make an order binding on another court about possible relief from the restriction.
In a judgment dated 21 December 2005, Mr Justice John MacMenamin found that Davis had not satisfied the court that he acted responsibly in managing the company. The company, which operated a nightclub, was wound up in May 2003 after its financial position deteriorated. The court’s decision concerned Davis; it said Peter May’s position had already been considered by the courts and did not address it in this application.
The judgment records that the company had a deficit of €698,499.26 when it went into liquidation. The judge found that it was chronically underfunded, debts were not being paid as they fell due, and its accounting procedures were inadequate. Among the concerns were missing VAT returns throughout Davis’s directorship, incomplete recording of transactions, and a failure to carry out bank and cash reconciliations. The court also noted that the company’s records understated wages reported to Revenue and that tax procedures for employees were not properly applied.
Davis’s counsel argued that the company stopped trading principally because it lost its venue after Garda objections to its liquor licence, and that Davis had been a director for only about eight months. The defence also pointed to personal guarantees and efforts to secure investment and working capital. The judge acknowledged those matters but found that the company’s debts and financial problems were already serious before the licensing difficulty emerged in February 2003. He concluded that the licence issue was the final step in a path to insolvency already well advanced.
The liquidator also alleged that Davis had failed to co-operate with the investigation. The judge rejected that allegation, noting that Davis attended meetings and that his accountant offered further assistance. He considered it unsurprising that Davis’s solicitor responded to a letter accusing him of dishonesty and misuse of company funds. The declaration was made in the terms sought in the application.