by Matthew Austin , Jeremy Erwin, Michael Kelly July-27-2021 in Litigation & Dispute Resolution, Insolvency & Restructuring
The High Court (Mr Justice Sanfey) recently ordered that Mr Peter Conlon of Pembroke Dynamic Internet Services Limited (in liquidation) be disqualified for the longest period of disqualification ever ordered in the history of the State, following an application by the liquidator Myles Kirby.
The Law
The Companies Act 2014 provides for the restriction and disqualification of directors.
Section 819 deals with restriction of directors. Where an insolvent company goes into liquidation or receivership and a director of the company fails to satisfy the Office of the Director of Corporate Enforcement (“ODCE”) or the Court that he or she has acted honestly and responsibly they may be restricted. Restriction lasts for a period of five years and confines a person to being a director of companies that have been adequately capitalised by their members or shareholders.
Disqualification is a much more serious form of censure. A person can be disqualified by way of a disqualification order by the Court, by accepting a disqualification undertaking offered by the ODCE or automatically by committing certain offences.
Disqualification means that the person is prevented from being appointed or acting as a director or other officer, statutory auditor, liquidator, receiver, examiner or being in any way whether directly or indirectly concerned with or take part in the promotion, formation or management of a company.
Section 842 of Companies Act 2014 permits the Court to “make a disqualification order in respect of a person for such period as it sees fit”.
The Decision
Judge Sanfey stated that in deciding on a period of disqualification “it is necessary to examine the company’s history and the respondent’s role in it, and the liquidator’s investigation of its affairs”.
The Court, in applying the principles set out in Re Bovale Developments Limited, Director of Corporate Enforcement v. Bailey & Anor [2013] IEHC 561, held that the period of disqualification should reflect the gravity of the conduct or wrongdoing of the director in question. The Court ruled that in light of the serious fraud and diversion of charitable donations a disqualification period of 18 years was appropriate. However, the Court reduced this by two years based on mitigating factors including Mr Conlon’s age, the fact that he had previously been imprisoned and the fact that he entered into a settlement with the liquidator of the company.
This case illustrates that in cases where an applicant can establish serious misconduct on the part of a director, the Court will make disqualification orders for a significant period.
Hayes solicitors LLP are familiar with all aspects of company law and regularly act for liquidators, examiners and receivers in insolvency matters. If you have any questions about this article or any related matter please contact Matthew Austin maustin@hayes-solicitors.ie, Jeremy Erwin jerwin@hayes-solicitors.ie, or Michael Kelly mjkelly@hayes-solicitors.ie.
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About the Authors
Matthew Austin
Matthew is a partner in the Commercial & Business team and has considerable expertise in a range of practice areas, having acted for Irish and International clients in domestic and multi-jurisdictional issues. Matthew has advised in civil and administrative law disputes and in regulatory and advisory matters including insolvency/restructuring, IP, defamation and media law, competition and consumer protection and data protection.
Jeremy Erwin
Jeremy specialises in insolvency, commercial litigation and dispute resolution, acting for a variety of companies and financial institutions in contract law cases, enforcement and recovery actions and in high value complex Commercial Court proceedings. Jeremy also specialises in intellectual property matters, including advising on registration and protection of trade marks and related rights and on trade mark disputes.
Michael Kelly
Michael is an senior associate solicitor in the Commercial Litigation & Dispute Resolution team at Hayes. He has experience advising commercial clients with respect to a wide variety of issues, in particular restructuring and insolvency cases. He regularly acts for receivers, liquidators and examiners in High Court and Commercial Court proceedings.