Three directors of DQ Entertainment (Ireland) Limited have been held jointly and severally liable for US$30,800,238.92 after the High Court found they knowingly participated in reckless trading and trading with intent to defraud creditors.
Mr Justice Mark Sanfey made the declarations in a judgment delivered on 30 November 2023. The case concerned an application under the Companies Act 2014 by Powerkids Entertainment (Singapore) Pte. Limited, receiver Patrick Bance and Madison Pacific Trust Limited. The company, which provided animation and live-action production services, was in receivership.
The first three respondents—Rashida Adenwala, Tapaas Chakravarti and Sanjay Choudhary—did not attend the June 2022 trial. The judge was satisfied they knew about the hearing and had chosen not to contest the application. The applicants’ evidence was therefore uncontested and was not tested by cross-examination. The judge said the witnesses appeared honest and forthright and he had no reason to doubt their evidence.
The receiver’s evidence described overstated intangible assets and trade receivables, inadequate company records, and payments to other companies that he said lacked adequate supporting documentation or commercial justification. The judgment also found three purported co-production agreements with Method Animation were not genuine. The judge concluded that the company had been insolvent at least since 31 March 2017 and that its assets were insufficient to meet its debts.
The applicants sought personal liability of US$30,800,238.92, calculated from bond-related principal and interest, less repayments and a US$63 million credit bid for intellectual property assets. The judge considered that amount just and proportionate in light of the conduct described in the evidence. He directed that the sum be payable to Madison, which held security over the company’s assets and undertaking.
The court declared that the first three respondents were personally liable on a joint and several basis and entered judgment for the same sum in favour of Madison. It also declared that adequate accounting records had not been kept, contributing to the company’s inability to pay its debts and creating substantial uncertainty about its assets and liabilities; that the respondents had misapplied company property and committed misfeasance and breaches of duty and trust; and that they made a declaration of solvency without reasonable grounds.
The applications against the fourth and fifth respondents were struck out, with no order as to costs between them and the applicants. The first three respondents were ordered to pay the applicants’ costs, including reserved costs, to be adjudicated if the parties could not agree. The judgment records proposed orders and grants the applicants liberty to apply if issues arise over their terms.