Re Balbradagh Developments Ltd

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 31 July 2008
• Neutral Citation: [2008] IEHC 329
• Docket Number: [2008 No. 250
• Court: High Court
• Date: 31 July 2008

[2008] IEHC 329

THE HIGH COURT

[250 COS/2008]

Balbradagh Developments Ltd, In re

IN THE MATTER OF BALBRADAGH DEVELOPMENTS LIMITED.

AND

IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2007

COMPANIES ACT 1963 S214

COMPANIES ACT 1963 S267(3)

COMPANY LAW ENFORCEMENT ACT 2001 S47

FALCON R J DEVELOPMENTS LTD, IN RE 1987 BCLC 437

MACCANN, COURTNEY COMPANIES ACTS 1963-2006 2ED 2007 498

COMPANY LAW ENFORCEMENT ACT 2001 S56

COMPANIES ACT 1963 S280

MAGNUS CONSULTANTS LTD, IN RE 1995 1 BCLC 203

COMPANY LAW

Winding up

Petition - Grounds for winding up - Loans to company by directors of company - Connected creditors - Contest over appointment of liquidator - Creditors meeting - Whether votes of directors of company should be disregarded in contest for appointment of liquidator - Whether company should be wound up voluntarily - Whether petition should be dismissed - Re Falcon RJ Developments Ltd [1987] BCLC 437 and Re Magnus Consultants Ltd [1995] 1 BCLC 203 considered - Companies Act 1963 (No. 33), s. 267(3) - Petition dismissed (2008/250COS - Laffoy J - 31/7/2008) [2008] IEHC 329

Re Balbradagh Development Ltd

Facts: section 267 of the Companies Act 1963, as amended, provides that "If at a meeting of creditors...a resolution as to creditor's nominee as liquidator is proposed, it shall be deemed to be passed when a majority, in value only, of the creditors present...and voting on the resolution have voted in favour of the resolution". The petitioner was a creditor of the company who had petitioned the High Court for an order winding up the company and appointing a certain person as liquidator. He agreed to adjourn the petition to allow for the holding of a creditor's meeting with a view to the company being wound up in a creditor's voluntary winding up. An alternative person was voted to act as liquidator at that meeting. The petitioner contended, inter alia, that his appointment was invalid as he had not been voted by a majority in value of unconnected creditors.

Held by Laffoy J in dismissing the petition that the factors to be considered by the court in the exercise of its discretion as to whether a compulsory winding up order should be made over a creditor's voluntary winding up were: the interest of the generality of the creditors and the members of the company; whether the company was seriously insolvent; whether liquidation pursuant to court order was likely to involve greater cost and time that a creditor's voluntary winding up and whether there were sufficient safeguards present to ensure that the liquidator investigated allegations of wrongdoing by directors or connected creditors properly. That the votes of the connected creditors in favour of the appointment of a certain liquidator at the creditor's meeting should not be disregarded as it represented the wishes of the majority in value of the creditors.

Reporter: P.C.

1 Ms. Justice Laffoy delivered on the 31st day of July, 2008

2 The petition of Concloda Construction Ltd. (the Petitioner) to wind up Balbradagh Developments Limited (the Company) was presented on 25 ^th June, 2008. It was preceded by a demand within the meaning of s. 214 of the Companies Act 1963 (the Act of 1963), which was served on 26 ^th May, 2008. The demand related to a debt of €264, 655.88, which comprised the balance due by the Company to the Petitioner on foot of an arbitrator's award made on 5 ^th December, 2007 and the Petitioner's costs of the arbitration, which were awarded against the Company and which had been certified by a Taxing Master of the High Court by a Certificate of Taxation dated 21 ^st May, 2008.

3 The petition was returnable in this court for 14 ^th July, 2008. It had been advertised in two national daily newspapers on 4 ^th July, 2008 and in Iris Oifigiúil on 8 ^th July, 2008. In the petition, the Petitioner proposed the appointment of Mr. George Maloney, Chartered Accountant, to act as Official Liquidator. I am satisfied that all the proofs were in order on 14 ^th July, 2008, and, if the petition had proceeded without opposition, a winding up order would have been made and Mr. Maloney would have been appointed Official Liquidator for the purposes of the winding up.

4 However, on 14 ^th July, 2008 counsel for the Petitioner informed the court that the Company was summoning a creditors' meeting with a view to the Company being wound up in a creditors' voluntary winding up and requested that the petition be adjourned for two weeks pending the holding of the creditors' meeting. The creditors' meeting was duly held on 22 ^nd July, 2008. At that meeting, the directors of the Company proposed Mr. Declan McDonald, a Chartered Accountant, as liquidator. The Petitioner nominated Mr. Maloney as liquidator. The matter was put to a vote and the result, which I will examine in detail later, was that the majority in value of the creditors favoured the appointment of Mr. McDonald.

5 The Petitioner was dissatisfied with the conduct of the creditors' meeting and with the appointment of Mr. McDonald as liquidator. When the matter came back before this court on 28 ^th July, 2008, the Petitioner informed the court that it was proceeding with the petition. The petition was heard on 30 ^th July, 2008. The evidence before the court as to what transpired at the creditors' meeting comprised an affidavit sworn by Seamus O'Sullivan, a director of the Petitioner, on 25 ^th July, 2008, and an affidavit of Kenneth Pratt, a director of the Company, who chaired the creditors' meeting, which was sworn on 28 ^th July, 2008.

6 Before considering the evidence, I think it important to emphasize three matters.

7 The first is that what the Petitioner is seeking on this application is to have the Company wound up by the court, rather than by way of a creditors' voluntary winding up, not merely to have an alternative liquidator appointed.

8 Secondly, the Petitioner in his affidavit and through his Counsel at the hearing of the petition has made it clear that, in proceeding with the petition, he is in no way impugning the integrity or independence of Mr. McDonald or his capacity to properly act as liquidator in a creditors' voluntary winding up. Mr. McDonald, in his affidavit sworn on 29 ^th July, 2008, has outlined his qualifications and experience as an insolvency practitioner and the circumstances in which he came to be involved with the Company....