Background
A Receiver was appointed to the company by the company's bankers on 26 August 2003.
I was appointed Liquidator of the company on 24 September 2003 by Order of the High Court on foot of a winding up petition issued by Independent Newspapers Marketing Limited.
Statement of Affairs
The company's former managing director, Mr. Mark Beggs, has submitted a sworn Statement of Affairs to the High Court. I set out below a summary of the Statement of Affairs:
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ASSETS OF THE COMPANY
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€
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|
Tangible Assets
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55,467
|
|
Trade Debtors
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3,227,633
|
|
TOTAL ASSETS
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3,283,100
|
|
|
|
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CREDITORS
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€
|
|
Bank Creditors
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(3,459,425)
|
|
Employee Claims
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(137,456)
|
|
Revenue Commissioners
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(628,000)
|
|
Trade Creditors
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(2,490,000)
|
|
Directors Loans
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(280,000)
|
|
TOTAL CREDITORS
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6,994,971
|
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DEFICIENCY
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(3,711,871)
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You will note from the above that Mr. Beggs estimated the company's deficiency to be €3,711,871. My investigations indicate that the deficiency will be at least €6.8 million.
Section 56 Report to the Office of the Director of Corporate Enforcement ("ODCE")
For more background information on Liquidators' reports to ODCE, please refer to Official Liquidations Update Background.
I identified the following individuals of the company as being directors of the company within 12 months of the company's insolvency:
Mark Beggs, Antony Martin, Paschal Taggart, Shay Moran and Liam Gaskin.
I submitted my Section 56 Report to ODCE on 16 January 2004. The contents of the Report are private and confidential. By letter dated 13 May 2004 ODCE informed me that I was not relieved from my obligation to make an application to the High Court pursuant to Section 150 of the Companies Act.
I instructed my solicitors to proceed with the Section 150 Application, and the necessary papers were filed with the High Court on 15 June 2004. After many exchanges of affidavits, the Application was heard by the High Court on 1 December 2005. Judgment was delivered on 13 March 2006 at which time it was held that Paschal Taggart, Shay Moran and Liam Gaskin should not be restricted. As indicated below, Mark Beggs and Antony Martin had previously been Restricted by Order of the High Court in a separate action brought by the Receiver.
Legal Settlements to date
The Receiver issued proceedings against Mark Beggs and Antony Martin under Section 297A of the 1963 Companies Act and Section 139 of the 1990 Companies Act. I was a Notice Party to these proceedings.
The Proceedings were concerned with a number of issues, including the short fall in the collection of invoices which had been invoice discounted to the bank. The Receiver reported that at the date of his appointment €3,727,634 was stated to be due from debtors, whereas at 18 June 2004 only €802,289 had been collected.
Neither Mr. Beggs nor Mr. Martin ever filed an affidavit denying any of the claims made in the Receiver’s action. Instead, Mr. Beggs and Mr. Martin consented to the making of a declaration that they had engaged in reckless trading. Judgment was given against Mr. Beggs and Mr. Martin in the amount of €2.2 million. The Court also made Restriction Orders against each of Mr. Beggs and Mr. Martin under Section 150 of the 1990 Companies Act. I have agreed with the Receiver that the Liquidation will receive €20,000 from the monies which he receives from Mr. Beggs and Mr. Martin. Any other monies which the Receiver recovers from Mr. Beggs and Mr. Martin will be captured by the Bank’s charge.
I found that a creditor of the company had received “preferential” payments from the company in the period immediately prior to the company’s Receivership. Upon legal advice, I negotiated a settlement with the creditor whereby I will receive €38,000 in full and final settlement.
Following the Section 150 Judgment I am seeking advice as to what other legal actions, if any, I should take.
Dividend Prospects for Creditors
The company's secured lender, Ulster Bank, face a significant shortfall on their lending. While I am contemplating certain legal actions, it is clear that realisations from the company's assets will be insufficient to pay a dividend to unsecured creditors.
For further information please contact Jim Stafford or Tom Murray on 01 661 4066 or
stafford@liquidation.ie
or
murray@liquidation.ie