The High Court has found that four directors of Tralee Beef and Lamb Ltd (TBLL), in liquidation, acted honestly but not responsibly in relation to the conduct of the affairs of the company.
The four are: managing director Mr John Delaney and three non-executive directors - Ms Patricia Delaney, wife of Mr Delaney; Mr Terry Dunne, managing director of Commodore Holdings Ltd (CHL); and Mr Simon Coyle, a chartered accountant who was nominated by CF Investment Managers Ltd (CFIM), funds managers involved in Business Expansion Schemes.
Ms Justice Finlay Geoghegan yesterday made declarations restricting the four from acting as company directors for a five-year period unless any company in which they seek to be involved meets legislative requirements regarding paid-up capital.
Under Section 150 of the Companies Act, the court had no discretion to take into account the performance or position of a person as a director of any other company but must confine itself to the director's conduct in relation to the company before the court, she said.
The judge said TBLL was insolvent. It had been engaged in the deboning of cattle and lamb, which was sold in Ireland and the UK or sent to other deboning halls.
Mr Dunne was managing director of CHL, the holding company for the Garvey Group of companies. Before 1996, it owned the TBLL business and sold the assets to Mr Delaney, whose wife became a director at Mr Delaney's request.
Mr Dunne had claimed he was appointed director of TBLL on the basis that he would have no involvement in the day-to-day running of the business. He said his primary role was to foster the business relationship of TBLL with the Garvey Group and the Musgrave Group.
It appeared Mr Delaney was the only executive director and the three non-executive directors stated they had relied on Mr Delaney to provide them with financial information.
In 2000, the BSE crisis led to difficulties for the company. Mr Delaney realised by March 2001 that TBLL was in significant financial difficulties and had tried to find outside investors.
Following an indication by its auditors in October 2001 that the company's position was worse than had been thought, Mr Delaney, without consulting Mr Dunne or Mr Coyle, took steps to have a receiver appointed. Mr Coyle then appeared to have arranged that CFIM petition for the company's winding up.
The liquidator had raised the inadequacy of the financial information available. There was a difference of €6.3 million between the deficit in the October 2001 statement of affairs and the net asset position in draft accounts for the year ended March 2001.
The judge said the TBLL directors had satisfied the court they had acted honestly in relation to the conduct of the firm's affairs. She concluded that the financial information available to the directors must have been inadequate.
She found that Mr and Ms Delaney had failed to satisfy the court that they had acted at all times responsibly in relation to the conduct of TBLL's affairs.
Mr Dunne was an experienced businessman and under an obligation in 2000 and 2001 to inform himself about the company's affairs. Notwithstanding his earlier activity as a director, the judge said she could not, when considering Mr Dunne's entire tenure as director of TBLL, be satisfied that he had acted responsibly in relation to the conduct of the company's affairs.
The liquidator had stated he was satisfied that Mr Coyle acted honestly and responsibly. That did not relieve the liquidator from including Mr Coyle in the High Court application relating to the conduct of TBLL directors.
