Re Buzreel Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Hogan
• Judgment Date: 01 May 2014
• Neutral Citation: [2014] IEHC 225
• Docket Number: [No. 185 COS/2014]
• Date: 01 May 2014

[2014] IEHC 225

THE HIGH COURT

[No. 185 COS/2014]

Buzreel Ltd, In re

IN THE MATTER OF THE COMPANIES ACTS 1963 -2012 AND IN THE MATTER OF BUZREEL LIMITED

COMPANIES ACT 1963 S231(2)

COMPANIES ACT 1963 S213(3)

VAN HOOL MCARDLE LTD, IN RE 1980 IR 237 1982 ILRM 340

HIBERNIAN TRANSPORT COS LTD, IN RE 1972 IR 190

Liquidation - Winding-up petition - Companies Act 1963 - Sale of company assets - Best possible price to be obtained in a regular and fair fashion - Tender process- All offers to be supported by documentary evidence of funding - Withdrawal of status as preferred bidder - Length of time for money to clear - Second highest bidder had satisfactory proof of immediate funding - Van Hool order - One further opportunity to make a final bid - Whether compliance with Van Hool order - Whether unconditional offer

Facts: On 2 ^nd April 2014 Mr. Neil Hughes was appointed provisional liquidator of Buzreel Ltd, the sole classified advertising business in Ireland. Section 231(2) of the Companies Act 1963 provides that the liquidator in a winding up by the court shall have power to sell the assets of a company by public auction or private contract. The liquidator advertised the sale of the company"s assets. He required prospective bidders to make final offers to acquire the assets and undertaking of the business. The highest offer of €303,000 came from Midland Web and it was informed that evening that it was the preferred bidder. It was then confirmed it would take somewhere between three to four weeks for the necessary funds to clear. As funding was meant to be available immediately, Mr Hughes turned to the second highest bidder, Demirca Ltd. While its price bid was lower, it was the highest bid in respect of which the liquidator had satisfactory proof of immediate funding. Midland Web alleged that at all material times the liquidator was made aware that it would take three to four weeks for the necessary funds to clear and was assured that he would accept the investment portfolio as proof of funding. Midland Web therefore alleged procedural unfairness in relation to the assurances it was given. Nevertheless, it was prepared to raise its bid to €312,000. The judge believed the fairest way to proceed was to make a Van Hool order, offering both parties one final opportunity to make a final bid.

Held: The judge considered the principles laid down in the Supreme Court decisions of Re Hibernian Transport Companies Ltd.[1972] I.R. 190 and Van Hool McArdle Ltd. v. Rohan Industrial Estates Ltd.[1980] I.R. 23. The judge confirmed that the offer made by Midland Web was a valid bid. The judge therefore directed the liquidator to make the sale of assets and undertaking of business in favour of Midland Web for the sum set out in its letter of offer dated 28th April 2014.

1 JUDGMENT of Mr. Justice Hogan delivered on 1st May 2014

2 1. On 2 ^nd April 2014 Mr. Neil Hughes was appointed as provisional liquidator of Buzreel Ltd. ("Buzreer) by order of McGovern J. on foot of a petition presented by Midland Web Printing Ltd. ("Midland Web"). Buzreel is the owner of the only classified advertising business in Ireland, namely, the magazine known as "Buy and Sell". There were five weekly titles which were distributed widely among retailers throughout the island of Ireland. The company also has a strong online and social media presence. Publication ceased, however, once a liquidator was appointed.

3 2. Section 231(2) of the Companies Act 1963 ("the 1963 Act") provides that the liquidator in a winding up by the court shall have power to sell the assets of the company by public auction or private contract. Section 213(3) provides that that the exercise by the liquidator in a winding up by the High Court of the powers conferred on him by the section shall be subject to the control of this Court.

4 3. To this end the liquidator advertised the sale of the company's assets by an advertisement published in The Irish Times on April 4 ^th, 2014. He was naturally anxious to do this as quickly as possible so as, as Mr. Hughes put it in his affidavit of 15 ^th April 2014, "to mitigate the risk of brand value decreasing whilst the publications remained out of circulation." interested parties were then given an information memorandum which detailed the assets for saie and which also laid down a timetable for what was effectively a tender process.

5 4. In this regard the liquidator required prospective bidders to make final offers to acquire the assets and undertaking of the business by 12 noon on Thursday 10 ^thApril. The information memorandum required that "ail offers must be supported by documentary evidence of funding to the satisfaction of the Provisional Liquidator." The information memorandum then continued:

"Acceptance of the preferred offer will be communicated by close of business on 10 ^th April 2014. Please note that there will be a requirement for the preferred purchaser to enter into an asset sale agreement on 11 ^th April 2014. The asset sale agreement will be conditional on approval of the sale by the High Court."

6 The Provisional Liquidator intends making an application on 11 ^th April 2014 (or the earlier possible time thereafter) for the approval by the High Court of the sale of the assets to the preferred purchaser.

7 The Provisional Liquidator reserves his right to change the timetable set out above."

8 5. As it happens, the deadline was extended to 5.30 p.m. on Thursday, April 10 ^th. The liquidator received four offers in total, ranging from €26,000 to €303,000 (exclusive of VAT). The highest offer of €303,000 came from Midland Web and it was informed that evening that it was the preferred bidder. Midland Web was also informed that the liquidator intended to complete the sale of the relevant assets on the following day, subject only to approval from this Court.

9 6. At this point a difficulty arose. It became clear from the letter provided from Ulster Bank that Midland Web's funding was contingent on the early encashment of various investments held by the directors with that Bank, so that it would take somewhere between three to four weeks for the necessary funds to clear. In the light of these difficulties and having spoken with James Fanning of Midland Web, Mr. Hughes decided to withdraw Midland Web's status as the preferred bidder. Mr. Hughes maintained that the information memorandum had made clear at all times that time would be of the essence given the nature of the assets and the real possibility that the brand value would deteriorate. He suggested that it was clear that all bidders were - or, at least, ought to have been - aware from that memorandum that any proposed sale would have to be completed more or less immediately after this Court had approved the terms of the sale.

10 7. At that point Mr. Hughes turned to the second highest bidder, Demirca Ltd. ("Demirca"). While its bid was lower, it was nonetheless at that juncture the highest bid in respect of which the liquidator had satisfactory proof of immediate funding. This was the background against which Mr. Hughes applied by motion dated 15 ^th April 2014 to this Court for an order pursuant to s. 213(3) in respect of that sale to Demirca.

11 8. The matter originally came into the vacation list before Barr J. This matter was then adjourned to enable Midland Web to put in a replying affidavit. In that affidavit, the principal of Midland Web, Mr. Fanning, stated that at all material times the Provisional Liquidator was made aware that it would take three to four weeks for the necessary funds to clear. He specifically stated that an employee of Messrs. Hughes Blake had expressly confirmed to him that the Provisional Liquidator would accept the investment portfolio as proof of funding. Mr. Hughes responded by affidavit on 22nd April stating that he had never known or realised that the funding would take this length of time to clear.

12 9. A further complication was that Midland Web's original bid price - €313,000 - was disclosed by the Provisional Liquidator to Demirca in an effort to ensure that the original winning price was matched. At the hearing before me on 24 ^th April 2014 Midland Web strongly resisted the liquidator's application for confirmation of the sale on the basis that it would be unfair for the liquidator to go back on what it said had been the assurances given to it, although the liquidator had also put in a further replying affidavit denying any such assurances or understanding. Midland Web also indicated to the Court that it was now prepared to raise its bid to €312,000.

13 10. Given that all parties had stressed the urgency of the matter and that an immediate decision was necessary, I took the view that the fairest thing in the circumstances was to make a Van Hool order (Van Hool McArdle Ltd. v. Rohan industrial Estates Ltd. [1980] I.R. 237) and to give the two parties one final opportunity to make unconditional sealed bids. I reached this conclusion because it would have been impossible to determine the factual dispute in respect of the alleged assurance given to Midland Web without at least some form of oral hearing which the exigencies of time simply did not permit. It would have been equally unfair to Demirca to accept the slightly enhanced bid from Midland Web without having given it the same opportunity to increase its bid.

14 11. The liquidator was understandably anxious to ensure that the existing Demirca bid with its cleared funds should not be lost if there was a re-tender. I sought to guard against the possibility that the sale might be jeopardised and, as a condition of the making of the Van Hool order. I required Midland Web to give an undertaking (which was forthcoming) that it would make an unconditional bid of at least €312,000 on the re-tender.

The Van Hoot order of 24 ^th April 2014

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