A High Court judge has declared that Michael McAteer can continue as official liquidator of Swedex Windows & Doors Ltd, ruling that his later partnership with a former auditor of the company did not disqualify him under the Companies Acts.
The judgment, delivered by Ms Justice Finlay Geoghegan on 15 June 2010, concerned a motion by Mr McAteer for a declaration that he was entitled to remain in office. He had been appointed provisional liquidator on 23 March 2007 and official liquidator on 16 April 2007.
Ralph and Charlotte Gervais, respondents in separate proceedings brought by the liquidator, argued that he became disqualified in November 2008, when he joined the Grant Thornton partnership with Colin Feely. Mr Feely had been a partner of RSM Robson Rhodes, which audited Swedex until the winding up. The Gervaises also argued that a potential conflict of interest meant Mr McAteer should not continue.
The judge considered whether Mr Feely remained an officer of Swedex in November 2008. She concluded that, generally, a winding-up order and appointment of an official liquidator discharge the company’s auditor from office. She noted that an auditor might remain in office under a special contractual provision or in particular circumstances, but no such basis was established in this case.
RSM’s last audit was of Swedex’s accounts for the year ended 31 December 2005. The judge assumed that RSM was reappointed at the company’s 2006 annual general meeting, with the appointment continuing until the next annual general meeting. She concluded that Mr Feely ceased to be Swedex’s auditor when the official liquidator was appointed on 16 April 2007. As Mr McAteer joined his partnership in November 2008, he did not then become a partner of an officer of the company for the purposes of section 300A.
On the conflict argument, the judge said no submission identified any action or inaction by RSM that required investigation by the liquidator and could create a conflict. She also considered a potential claim by Bank of Scotland (Ireland) against RSM relating to alleged representations by a former RSM partner about facilities provided to Swedex. The bank had no objection to Mr McAteer continuing, and the judge found the potential claim did not preclude him from acting.
The court declared that Mr McAteer was not disqualified under section 300A of the Companies Act 1963 and was entitled to continue as official liquidator. The ruling addressed his eligibility and the conflict concerns raised on the motion; it did not determine the separate proceedings against the Gervaises, which were set down for hearing in October 2010.