|Ireland High Court Rejects Sacking of Liquidator|
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The High Court has rejected an attempt by the directors of a failed company to sack the liquidator, who wants to make them personally liable for their ‘‘brazen’’ conduct.
Ralph and Charlotte Gervais of Ballydavid House, Woodstown, Co Waterford, asked the High Court to rule that accountant Michael McAteer was disqualified as liquidator to Swedex Windows and Doors Ltd because he was a partner to the company’s former auditor.
Swedex, which was based at Ballyrogan Stud, Riversdale, Co Wicklow, collapsed in March 2007 with the loss of 109 jobs. The High Court was told that ‘accounting errors’ had been discovered, including misposted invoices, missing credit notes and mispriced jobs.
McAteer, a chartered accountant, was appointed official liquidator of the company in April 2007.
His application to make Ralph and Charlotte Gervais personally liable for the debts of the company is due to be heard next month.
Last year, McAteer told the Commercial Court that the couple had ‘‘brazenly’’ used company’s money generated from an alleged ‘‘massive fraud’’ to fund their lifestyles, with no thought for creditors.
He claimed that Swedex had obtained €1.24 million from a bank using false invoices, and that the firm had paid €431,000 for improvements to what’s claimed to be the couple’s former home.
The liquidator wants them to be made personally liable for the company’s debts and Ralph Gervais to repay €2.25 million in personal expenses put on the company credit card.
Solicitors for Gervais claimed that, due to a series of mergers of accountancy firms, McAteer became the partner of the auditor to the company in November 2008, and was thus disqualified for appointment as liquidator. The 1963 Companies Act says a partner of an officer of the company cannot be appointed as liquidator of that company.
RSM Robson Rhodes had acted as auditors to Swedex from 2002 to the beginning of the winding up. Colin Feely, a partner in RSM, had joined Grant Thornton as a partner in July 2007. McAteer joined the partnership in November 2008. McAteer said Feely was not an officer of Swedex at that time, but Gervais said that, even if McAteer was not disqualified, there was a potential conflict of interest.
Mrs Justice Mary Finlay Geoghegan, in her judgment, said there was ‘‘a surprising dearth of legal analysis of the impact of a winding-up order’’ on the appointment of an auditor.
She concluded that, in general, a winding-up order and the appointment of an official liquidator by the court effectively discharged an auditor from office. Therefore, Feely was not the auditor to Swedex in November 2008. Mc Ateer was thus not disqualified from acting as liquidator.
She also said that no submission had been made that the liquidator should investigate any action or inaction by RSM, so there could be no conflict of interest.
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Published on our website on Sept.21, 2010