The directors of collapsed artificial intelligence company Altada Technology Solutions were told to seek independent legal advice over a €500,000 loan to the company to which “exorbitant and punishing” terms were attached, according to an affidavit filed by its liquidator in the High Court this week.
The loan, which is currently the subject of a complex legal row, was granted to the company in September 2022 by a group of creditors. In November, the four creditors – Grattan Boylan, Lynn Bruce, Alan Bruce and Noreen Gallagher – appointed a receiver – Nicholas O’Dwyer of Grant Thornton – to the business on foot of the loan after Altada failed to meet its obligations.
John Healy of Kirby Healy Chartered Accountants in Dublin was later appointed by the High Court as liquidator to Cork-based Altada last December on foot of an application by a different creditor, a company called Datech, led by US businessman Jeffrey Leo.
Revenue – who are owed in excess of €2 million by Altada – has questioned the legality of the loan, which it claims should not have been allowed to proceed given the company’s level of insolvency at the time.
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In his preliminary investigation into the company’s affairs, Mr Healy found that Altada lost an average of almost €867,000 per month in the first seven months of last year before eventually collapsing. In a 39-page affidavit filed in the High Court last month, the liquidator said the company’s deficit to its creditors at the end of last year may “substantially exceed” €10 million. But when the creditor deficit is added to the €11.5 million Altada raised in a funding round in September 2021 it could exceed €20 million.
Mr Healy has, in previous affidavits, also alleged that the decision to accept the loan was taken without the knowledge and consent of shareholders and creditors. The four creditors have denied any impropriety on their part.
Now, in an affidavit filed this week, the liquidator – who said he has now been granted access to “the full email accounts of the company, including the directors” – outlined correspondence between Altada’s “chief” intellectual property counsel and its directors from August 2022.
The directors – including husband and wife duo Allan Beechinor and Niamh Parker, who cofounded Altada – are urged to seek independent legal advice over the terms of the loan.
They were told that the terms of the loan “are clearly exorbitant and punishing”. The High Court heard previously that the €500,000 loan was granted over eight months with an additional “premium” of €500,000 to be paid on top of the principal at the end of the eight-month period, an arrangement Mr Justice Brian Cregan described as “most unusual”.
Altada’s directors were warned by their counsel that “majority shareholder consent is required” before the agreement could proceed. However, they were told: “We expect [the loan terms] will not be acceptable to the shareholders so consent will not be provided.”
The email goes on: “If you proceed without consent you do so on risk to Altada and yourselves as directors (eg Altada sued for breach of contract, action for shareholder oppression, personal liability to each of you as directors of the company for your debt.”
The directors were also told that “Altada also currently does not have any contracts signed with customers” and that it should be considered in light of Altada’s “ability to repay”.
Mr Beechinor and Ms Parker are not notice parties to the Revenue’s motion due to the fact that the company’s assets have been sold by the receiver to a company controlled by Dublin tech entrepreneur Eoin Goulding.
Asked for comment, Ms Parker told The Irish Times that neither she nor Mr Beechinor had seen the affidavit, which was presented to the notice parties earlier this week, and therefore would not be commenting.
The matter is back in the High Court on Thursday.
