A “highly adversarial” legal row is expected to unfold over the coming weeks, the High Court heard on Monday, as the Revenue Commissioners apply for the court to set aside a €500,000 loan to insolvent artificial intelligence company Altada Technology Solutions.
The company, which collapsed into receivership and then liquidation late last year before being bought by Dublin tech entrepreneur Eoin Goulding, owes the Revenue in excess of €2 million.
But the tax authority has queried the legality of a €500,000 loan made to the company by four investors – Grattan Boylan, Lynn Bruce, Alan Bruce and Noreen Gallagher – just months before its ultimate demise.
Shortly after the loan was agreed, the four investors, who are now classed as preferential creditors in the liquidation, had Grant Thornton’s Nicholas O’Dwyer appointed as receiver to the company last November on foot of the debenture.
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The receiver subsequently sold Altada – which had hoped to achieve a $1 billion valuation last year – to Mr Goulding’s vehicle Cometgaze for a sum understood to be between €2 million and €3 million. This happened despite the fact that a separate, higher bid was entered by a consortium led by US business Jeffrey Leo, a founding shareholder in Altada.
The Revenue’s position is that the receiver may not have had the right to sell the company to Mr Goulding on the basis that the loan was unlawful.
Senior counsel Dermot Cahill, for Revenue, told the court that there were a number of questions around the validity of the debenture and Altada’s ability to enter into it given that it was likely insolvent at the time.
Among other things, he said Revenue wanted to ascertain whether the four investors are relying on a fixed or floating charge over Altada’s assets. It is also looking for confirmation of what money has passed from Cometgaze to either the receiver or the debenture holders at this stage.
Senior counsel Lyndon MacCann, for the debenture holders, said there was unlikely to be much “factual controversy” surrounding the application although there may be “significant legal controversy” arising from the facts.
Mr Justice Brian Cregan said the Revenue’s application was indeed likely to be “highly adversarial”.
Earlier this month, barrister Arthur Cunningham, acting on behalf of the Revenue, queried the lawfulness of the receiver’s appointment on the basis that, among other things, Altada was “heavily insolvent” at the time the debenture was registered, according to the liquidator’s preliminary report.
Mr Cunningham said that while there were “many, many moving parts” to this matter, the Revenue’s position was simple: that the debenture was invalid because the assets that Altada assigned security for the loan were worth far less than thought at the time.
The matter has been listed for mention on Thursday, March 16th.
