The liquidator of Usit Ltd and Usit World plc, who claims both companies have total liabilities exceeding €180 million, has applied to the High Court for orders under section 150 of the Companies Act which would place restrictions on the directors of both companies for a five-year period.

A person against whom a section 150 order is made must meet certain capital requirements to act as a director.

Mr Ray Jackson, an accountant, was appointed official liquidator to Usit Ltd by the court on February 18th, 2002. He has applied for Section 150 orders to be made against Mr Gordon Colleary and Mr Angel Olivares, directors of Usit Ltd, which is registered in Northern Ireland; and against Mr Colleary, Mr Olivares, Ms Maureen Colleary, Ms Lynn Millington-Wallace, Mr Xavier Moreels and Mr Gerard Connolly, directors of Usit World plc, which is registered in Dublin.

All of the directors are opposing the application.

In the Usit Ltd liquidation, Mr Jackson said there were liabilities of €120 million and receipts of €3.4 million in May last.

Mr Colleary has contended the liabilities in Usit Ltd are more than €20 million lower than the liquidator's figures. The liquidator also said Usit World plc has liabilities of €61 million and receipts of €1.57 million.

Mr Colleary, who is also chairman of Tribune Newspapers which published the Sunday Tribune, in an affidavit said he would demonstrate that at all material times he had acted both honestly and responsibly in relation to the conduct of Usit Ltd and Usit plc. He said there were no reasons why it would be just and equitable for the court to impose restrictions.

He said Usit World plc and its subsidiaries, (referred to as the group), were, up to the unprecedented events of September 11th, 2001, well positioned to become the largest student travel company in the world.

The group was well organised and had effective management and corporate structures. However, September 11th, 2001, was the single cause of the collapse of the group.

Notwithstanding his most strenuous efforts and those of the other directors of Usit World plc and at great cost to himself, the Usit group collapsed, Mr Colleary said. He would demonstrate that his actions during the course of his 35 years stewardship were at all times responsible. Mr Colleary said neither he nor any of the other directors had any responsibility for the net deficiency of the assets of the company at the date it was wound up . He had at all material times acted in accordance with the standards of normal commercial probity.

Earlier, Mr Jackson, in an affidavit, said Usit Ltd was the treasury company which operated in the Usit group. He referred to the manner in which Usit Ltd transacted business and also to business with subsidiary companies of Usit World plc. Usit Ltd was the vehicle through which most of the money entering and exiting the Usit group flowed, he said.

Mr Jackson added that part of the deficit was due to €54,376,3000 being due by Usit World plc to Usit Ltd. Only a very small dividend would be received by Usit Ltd in respect of this indebtedness, he said.

The last audited accounts in respect of Usit Ltd were filed on October 31st, 1995, Mr Jackson said. Clearly, they were so old that they had no value to him. There did not appear to be any minutes of directors' meetings of Usit Ltd. It seemed the affairs of all of the group were dealt with at the directors' meetings of Usit World plc. He was also of the view that the records were insufficient and inadequate for a company the size of Usit Ltd.

Mr Jackson said the business model of Usit Ltd was reasonably simple. It discharged obligations incurred by other parties and those other parties then accounted to Usit Ltd in respect of those transactions.

The accounting included a profit margin for Usit Ltd which varied depending on whether or not Usit Ltd was dealing with a subsidiary of the Usit group or a third party.

Given the very significant amounts of money involved, there should have been control systems in place to clearly identify the amounts due by subsidiary and third party debtors to Usit Ltd from time to time and to ensure those levels of indebtedness could not escalate to dangerously high levels, he said.

The hearing before Mr Justice Peart continues today.