Re Tony Gray & Sons Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Clarke |
| Judgment Date | 26 November 2009 |
| Neutral Citation | [2009] IEHC 557 |
| Court | High Court |
| Date | 26 November 2009 |
[2009] IEHC 557
THE HIGH COURT
COMPANIES (AMDT) ACT 1990 S18
COMPANIES (AMDT) ACT 1990 S24
LARAGAN DEVELOPMENTS LTD, IN RE UNREP CLARKE 31.7.2009 2009 IEHC 390
COMPANIES (AMDT) ACT 1990 S24(4)(C)
COMPANIES (AMDT) ACT 1990 S2
TRAFFIC GROUP LTD, IN RE 2008 3 IR 253 2008 2 ILRM 1 2007/58/12501 2007 IEHC 445
COMPANY LAW
Examinership
Scheme of arrangement - Opposition to approval of scheme - Hearing - Absence of new capital - Business difficulties - Fire - Break-in - Insolvency - Proposed writing off of debt - Position of creditors - Secured creditors - Deferral of payment - Position of shareholders - Whether scheme fair and non-prejudicial - Reality of survival prospects - Use of business name by related company - Whether reasonable prospect of survival and maintenance of employment - Credible basis for projections - Business name - Asset of company - Approval of scheme subject to undertaking to withdraw use of business name - Re Laragan Developments Ltd [2009] IEHC 390 (Unrep, Clarke J, 31/7/2009) and Re Traffic Group Ltd [2007] IEHC 445 [2008] 3 IR 253 considered - Companies (Amendment) Act 1990 (No 27), s 24 - Scheme approved subject to undertaking (2009/447COS - Clarke J - 26/11/2009) [2009] IEHC 557
Re Tony Gray & Sons Limited
Mr. Hughes ("the Examiner") was appointed as Examiner to the company named in the title of these proceedings, ("Tony Gray"), by order of Cooke J. of 24 th August, 2009, having previously been appointed as an interim Examiner by order of Hedigan J. of 17 th August, 2009. Subsequent to the examination process the Examiner prepared a scheme of arrangement which was, in the ordinary way, presented to the Court for its consideration and, if thought appropriate, its confirmation.
There being opposition to the approval of the scheme, a hearing was conducted, in circumstances to which I will refer, and this judgment is directed towards the issues which arose at that hearing.
First it is appropriate to turn to the procedural history of the application. It should be noted that a number of extensions of time were granted, which are not material to the issues which now arise. Ultimately, the Examiner prepared a scheme of arrangement which was submitted to the various meetings required to be held under the provisions of the Companies Amendment Act 1990(As Amended) ("the Act"), which meetings, in the main, took place on 28 th October, 2009. It should be noted in that context that one issue concerning the position of financial institutions which acted as lenders to Tony Gray arose which led to a modification of the scheme after that time. That modification will be referred to in due course. However, on foot of the holding of the relevant meetings, the Examiner prepared his report under section 18 of the Act on the 5 th November. On the 6 th November the Examiner made an application to the Court, in accordance with the provisions of the Act, to receive that report and to fix a date for the hearing of the confirmation application under s. 24 of the Act. That hearing was fixed for, and commenced on, the 13 th November.
The hearing itself became somewhat complicated for a number of reasons. In that context it is necessary to note the opposition of one creditor of Tony Gray, that is to say a company called Ballinlough Refrigeration Limited ("Ballinlough"). Ballinlough did not directly appear at the confirmation hearing on the 13 th November but had, prior to that date, written a letter to the Examiner outlining one particular concern in relation to the Examiner`s report. Quite properly, the Examiner brought the contents of that letter to my attention on the occasion of the hearing which took place on the 13 th November.
The point raised in the letter concerned related to a contract for the carrying out of certain body building works in relation to vehicles (which business was the principal business of Tony Gray), to which reference was made in the Examiner's report. Ballinlough raised questions over the extent of the relevant contract and suggested that the contract concerned was significantly narrower in scope than had been suggested in the Examiner's report. In those circumstances, while being generally satisfied, on the 13 th November, as to most of the matters which I was required to consider under the provisions of the Act in order to confirm the scheme of arrangement, I adjourned the hearing and extended the protection period so as to permit the Examiner to explore the issue which had been raised by Ballinlough.
On the adjourned date, however, Ballinlough was represented by solicitors and counsel and raised a number of additional concerns beyond those which had been set out in its letter. It is fair to say that the point made in the relevant letter did turn out to be a valid point, in that the contract to which reference had been made in the Examiner's report did turn out to be less extensive than had originally been believed by the Examiner.
I should, at this stage, make the point that it is of the highest level of importance that creditors or other persons who wish to oppose the confirmation of a scheme brought before the Court by an Examiner under the Act should, at the earliest possible date, give details of the basis of their opposition. The situation that arose in this case was highly unsatisfactory. The general grounds of opposition ultimately articulated on behalf of Ballinlough were not even before the Court when the confirmation hearing on the 13 th occurred. Were it not for the fact that I decided to adjourn the matter to permit the Examiner to explore the contract question which had been raised, and to which I have already referred, it might well have been that the issues now under judgment would not have been considered at all.
In addition, the fact that the issues arose somewhat piecemeal over the course of a hearing which had to be adjourned from time to time to allow further examination to take place, gave rise to a most unsatisfactory hearing. It is important to emphasise, therefore, that those who might consider opposition to a scheme arising in an Examinership and, indeed, those who might advise such parties, should, at least to the extent to which it is possible, intimate to the Examiner, at the earliest possible time, the general basis of their opposition.
In some cases, such as, for example, in the Examinership in in Re Laragan Developments Ltd [2009] IEHC 390, where it becomes clear at the stage of the holding of the various meetings required by the Act that there is widespread opposition, the Examiner can intimate that fact to the Court so that arrangements can be put in place, such as those which were made in Laragan, which required anyone wishing to oppose the confirmation to set out in writing the basis of their opposition. Such a procedure has the very considerable advantage of putting some structure on the basis of opposition which might be put forward and also permits the Examiner and any other interested party to have had an opportunity to consider the opposition and place any materials that might be relevant to the issue or issues raised before the Court in an orderly fashion, rather than face the difficulty of having to meet evolving complaints as they arise in the circumstances that occurred in this case.
In any event, notwithstanding the unsatisfactory manner in which the opposition of Ballinlough was put forward, I came to the view that it was appropriate to address the issues raised and, indeed, some additional concerns which I had myself concerning the scheme, and this judgment is directed towards those issues. It is, therefore, appropriate to start with a brief outline of the scheme which was put before the Court by the Examiner.
First, it is important to note that no new capital, either from outside shareholders or from those who were already shareholders, is proposed to be injected into Tony Gray. The company met with a number of difficulties which led to its insolvency. The principal business of Tony Gray is concerned with the building of bodies for trucks to be placed on chassis bought in from third parties. It is obvious that in the current economic climate that business has fallen off very considerably. However, in addition, Tony Gray suffered two additional difficulties which had a serious effect on its business. First, there was a significant fire at its principal business premises and, second, there was a significant break-in. Thus, it was clear that its business difficulties stemmed partly from a general falloff in business of a very significant variety, and, also, from the unusual and unfortunate circumstances to which I have just referred. Tony Gray was, therefore, insolvent to a significant degree. It is in that context that it should be noted that the entire means of dealing with that insolvency as proposed in the scheme is, as I have indicated, not by the introduction of new capital but simply by the writing off of debt.
In fairness, it should be noted that part of the debt which is to be written off is a significant debt owed to members of the Gray family, who are principals behind Tony Gray.
Next it should be noted that there...
To continue reading
Request your trial
-
Arctic Aviation Assets Designated Activity Company
...the shareholding in the company does not deprive the scheme of being found to be fair and equitable. 137 In Re Tony Gray & Sons Limited [2009] IEHC 557, the court confirmed a scheme of arrangement in which unsecured creditors were receiving a dividend of 5% yet the shareholders were retaini......
-
Cara Pharmacy Unlimited Company
...1990 which was the predecessor provision to s. 541(4)(b)(ii) of the 2014 Act) by Clarke J. (as he then was) in Re Tony Gray & Sons Ltd [2009] IEHC 557 at paras. 21–22:- “21. It is important… to refer to the provisions of the Act and, in particular, s. 24(4)(c) which requires that a scheme o......