Re MB Refrigeration and Air Conditioning Ltd ((in Liquidation))

• Jurisdiction: Ireland
• Judge: Mr Justice Max Barrett
• Judgment Date: 21 December 2016
• Neutral Citation: [2016] IEHC 753
• Docket Number: [2013 No. 376 COS],[2013 No. 376COS]
• Court: High Court
• Date: 21 December 2016

[2016] IEHC 753

THE HIGH COURT

Barrett J.

[2013 No. 376COS]

IN THE MATTER OF MB REFRIGERATION AND AIR CONDITIONING LTD

(IN LIQUIDATION)

AND IN THE MATTER OF THE COMPANIES ACTS, 1963–2012

BETWEEN

MB REFRIGERATION AND AIR CONDITIONING LTD

(IN LIQUIDATION)

APPLICANT

– and –

ALLIED IRISH BANKS PLC

RESPONDENT

Company – The Companies Acts 1963-2012 – Disposal of assets post winding-up – Legality of transactions – Date of actual notice of winding-up – Position of preferential creditor

Facts: The liquidator sought a declaration to the effect that transactions entered into between the applicant/company and the respondent/bank after the commencement of the winding-up of the company was void pursuant to s. 218 of the Companies Act, 1963. The liquidator also sought an order requiring the bank to pay the amount of money involved in those transactions together with interest. The respondent argued that they became aware of the company's winding up at a date later than on which it was wound up and that the payment made in the credit account were not disposition as they did not involve disposal of assets at all. The respondent submitted that the liquidator should have filed an application under s. 602 of the Companies Act, 2014.

Mr. Justice Max Barrett held that any payment made by the bank from the company's in-credit bank account from the date of commencement of winding up to the date on which the company became aware of such winding up was valid and that the bank was not liable to the liquidator to pay any amount for the aforesaid period. The Court, however, held that payment made by the bank from the company's in-credit account after the date on which the company had actual notice of commencement of winding up proceedings was void except the payment made to the preferential creditor subject to the satisfaction of the liquidator that such payment to that creditor would have to be made during the liquidation procedure.

JUDGMENT of Mr Justice Max Barrett delivered on 21st December, 2016.

I. Background and Reliefs Sought

1 Mr Walsh is one of two joint official liquidators of MB Refrigeration and Air Conditioning Ltd (in liquidation). MB Refrigeration was wound up on foot of a petition that was presented on 13th August, 2013. The presentation of the petition was advertised in the Irish Independent and the Irish Daily Mirror on 22nd August, 2013, and, the following day, in Iris Oifigiúil. Thereafter, Mr Walsh was appointed liquidator pursuant to an order of the High Court (Moriarty J.) on 16th September, 2013. During his investigations as liquidator, Mr Walsh discovered that MB Refrigeration's bankers, including Allied Irish Banks plc, had permitted numerous transactions to be carried out on MB Refrigeration's bank accounts on dates subsequent to the commencement of the winding-up of MB Refrigeration. AIB has declined hitherto to engage with Mr Walsh on the subject of the post-commencement dispositions. Consequently, it has been necessary for Mr Walsh to bring the within application seeking, inter alia, the following reliefs: (i) a declaration that certain transactions between 13th August, 2013 and 4th October, 2013, on a particular AIB account constituted dispositions of the property of MB Refrigeration made after the commencement of its winding-up and thus are void pursuant to s. 218 of the Companies Act 1963; and (ii) an order of the court requiring AIB to pay to Mr Walsh (as liquidator) the amount of money involved in those transactions plus interest. By AIB's own account, and the court accepts this as true, the date on which AIB first became aware of the existence of the winding-up application was 18th September, 2013.

II. AIB's Position

2 What has AIB to say about the events at hand? In an affidavit sworn by one of its assistant managers, AIB avers that: (1) following the enactment of the Companies Act 2014, the within application ought more appropriately to proceed pursuant to s. 602 of that Act; (2) as mentioned, the date on which AIB first became aware of the existence of the winding-up application was on 18th September, 2013; (3) as part of the within application, the liquidator has sought to recover certain lodgements that were paid into a credit account. ‘ This’, the assistant manager avers ‘ was therefore not a situation where payments were being paid into an overdraft account so as [to] reduce an indebtedness of the bank and I am advised that, absent such indebtedness, payments into an account in credit… are not a disposition as they do not involve any disposal of assets at all’; (4) when it comes to withdrawals made between 14th August, 2013, and 21st August, 2013, Mr Walsh is seeking payment for monies paid out when the fact of the presentation of the petition of winding-up could not have been, and was not, within the knowledge of AIB, prior to the advertisement of the petition on 22nd August, 2013; (5) a number of the payments were payments to preferential creditors who would ultimately have been the...