A Co Wexford businessman, described as the "driving force" behind a property investment firm that went bust in 2009, is unfit to be a company director, the High Court has ruled.
Ms Justice Elizabeth Dunne yesterday said accountant Alan Hynes, who the court was satisfied was a de facto director of Tuskar Asset Management Plc (TAM) group, should be disqualified from being a company director for a period of three years.
The judge said she was satisfied Mr Hynes had failed to account, deal properly or provide an adequate explanation about the whereabouts of €3.1 million of shareholders’ funds . This was a clear breach of duty, which rendered Mr Hynes unfit to be a director of a company.
Neil Hughes, liquidator of TAM plc and represented by Gary McCarthy SC, sought orders under section 160 of the Companies Act disqualifying Mr Hynes from involvement in the affairs of any company on grounds of unfitness.
The liquidator had made a number of claims against Mr Hynes, including fraud. The matter of most serious concern to the liquidator was Mr Hynes's failure to adequately explain where €3.1 million of shareholders' funds had gone after the firm was wound up.
Capital growth
Mr Hughes said TAM was the holding company for a number of businesses involved in buying and developing land for investment, with the aim of achieving capital growth for its investors. Mr Hynes was its driving force.
Some €17 million had been invested in TAM, which was incorporated in 2006, before the property collapse, in sums of between €100,000 and €1 million.
Many investors had their life savings wiped out due to Mr Hynes’s actions it was claimed.
Alternatively, the liquidator asked the court to restrict Mr Hynes, under section 150 of the Companies Act, from involvement in any companies which do not meet certain capitalisation requirements.
Mr Hynes, of Westwinds, Crosstown, Co Wexford, opposed the liquidator's application and denied any wrongdoing. He said he did not benefit from the collapse of the company, and denied claims that he was involved in fictitious accounting.
He claimed he did his best in very difficult circumstances to address the difficulties facing TAM. The collapse of the company had to be seen in the context of the global economic collapse and particularly the Irish property collapse of 2008, he had argued.
In a lengthy and detailed ruling, Ms Justice Dunne found Mr Hynes was unfit to be a company director, and said it was very difficult in this case for the court to exercise any discretion.
Explanations
She said Mr Hynes had not provided the court with any adequate explanations in relation to €3.1 million of shareholders' funds that have not been accounted for. These funds were obtained through Mr Hynes, and were meant to be provided for the benefit of the company.
“This does not appear to have happened and there is no satisfactory explanation from Mr Hynes,” the judge said.
She said significant sums provided by shareholders could not be traced in the company’s records. The monies appear to have been received by Mr Hynes, but were not paid over by him for the benefit of the company.
Ms Justice Dunne said another issue of concern was that the company appeared to continue to trade while it was insolvent. TAM made a payment of €500,000 in 2008 which had the effect of relieving Mr Hynes of a personal guarantee given by him.
This, the judge added, was another significant breach of duty, and an example of Mr Hynes’s unfitness to be a director.
The judge, who agreed not to formalise her orders until both parties had fully considered her judgment, adjourned the case to early October when all outstanding issues will be dealt with.
