Lawyers for the liquidator of Ebeon Limited told the High Court yesterday it seemed "extraordinary" that a funding offer of $50 million (€50.67 million) was apparently rejected and within six months the company had closed with debts of £10 million (€12.7 million).

However, Mr Justice McCracken decided that seven named directors of Ebeon had not acted dishonestly or irresponsibly. He also criticised Eircom which, he said, had not "behaved particularly well" in relation to Ebeon although, he accepted, Eircom probably had other problems at the time. He described Eircom as the principal funder of the company.

Mr Gary McCarthy yesterday brought an application on behalf of Dublin accountant Mr David Hughes, the liquidator of Ebeon, on whether the directors should be restricted under Section 150 of the Companies Act from acting as directors of a company with less than £50,000 paid-up capital for a period of five years.

Mr Justice McCracken said there had been no dishonesty on the part of the directors. The question was whether they had acted responsibly or irresponsibly.

Ebeon had been one of the e- commerce companies set up in the mid- to late-1990s on the premise that there was an increasing market and that the company could not fail. He believed what happened was fairly typical.

Everyone knew the company would eat up capital in its early stages and would not make a profit, but the capital ran out before the profits started. In the end, the investors pulled the plug and did not invest further funds.

By September 2000, the directors were told the company would run out of money by December for day-to-day purposes and paying wages, unless £6 million was injected. The directors appeared to have reacted immediately by seeking further funding both from Eircom and outside investors. There was a considerable offer of $50 million from Deutsche Bank which, with hindsight, he was sure they should have taken.

There was some confusion as to who exactly rejected the offer. Ebeon director Mr Robert Booth claimed it was rejected by Eircom and Eircom implied it was rejected by the minority shareholders. Whatever happened, it had been rejected by shareholders and it was not in the provenance of the directors to accept unless the shareholders accepted - therefore the directors could be blamed for non-acceptance of the offer.

At the end of October 2000, Eircom offered funding subject apparently to board approval. On December 15th, the board rejected this. On January 16th, 2001, Eircom was again saying it was committed to the company. On January 17th, Eircom pulled out.

The directors had been tempted to have regard to the Eircom assurances. It was reasonable for them to believe the problems would be solved and they were led to that belief to some degree by Eircom. In those circumstances the directors had not acted irresponsibly.