195 / 424
GAZETTE
MAY/JUNE 1995
in their memories, and indeed delayed
notification could prejudice a director
if evidence to aid his case was no
longer available.'
It would seem that a liquidator at the
appearance by the directors may
express his views on whether he feels
there should be restriction or not. This
view should also take into the account
of the company creditors who are not
on notice of the application. The
difficulty here though is that an early
notification and appearance of the
directors may not however afford a
liquidator sufficient time to draw
adequate conclusions oh the honesty
and responsibility, or otherwise, of the
directors. Finally the director may, by
affidavit, set out how he at all times,
in his view, acted honestly and
responsibly. The expenses incurred by
liquidators in these applications would
seem to be part of the costs of the
liquidation as a whole, while directors
will have to bear their own costs, and
indeed, if ordered, contribute to the
liquidator's costs. The Companies
Office keeps a register of all those
persons restricted, noting such reliefs
as may occur"
7
.
Conclusion
The 1990 Act therefore has very
serious ramifications for the directors
o f companies involved in an insolvent
liquidation or receivership. Persons
who are on the Boards of numerous
companies, like solicitors and
accountants, could be severely
prejudiced by the mandatory aspect of
the legislation as every director of
every company in an insolvent
liquidation or receivership will have
to satisfy the Court o f their propriety
in respect of that c ompany 's affairs.
The scenario of companies
collapsing with outstanding debts and
yet re-appearing under a different
guise soon after, at which the
provisions appear to be aimed, are, it
is submitted, situations adequately
covered by the provisions on director
disqualification and reckless trading.
Indeed a director can be disqualified
for breaching any duty he may owe"",
and these surely entail acting in an
honest and responsible manner at
all times.
The avoidance of
'phoenix
syndromes'
,
while being entirely
laudable, with such mandatory
provisions as section 150, place a high
burden on directors and perhaps the
legislation might have been more
equitable had it instructed liquidators
or receivers to apply where there was
evidence of dishonesty or
irresponsibility.
In addition it is regretted that
applications with such potentially
wide ramifications contain large
procedural gaps and no specific
mechanism for the bringing to the
Court's attention the matters
addressed by Part VII and are to
evolve on such an
ad hoc
basis.
It may well be that the Company Law
Review group will decide that the
restriction chapter is too superfluous
to justify the extra burden and cost it
has imposed, both on liquidators and
directors, and the area may soon be
only a footnote in Irish Company
Law.
*Part 1 was published in the April
Gazette.
References
49. s. 150(2) (a).
50.
S
.297A (6) Companies Act, 1963 (as
amended).
51. |1993]3 IR 191.
52. Ibid p.225.
53. [1989] BCLC 520.
54. Palmer's Company Law p. 15209 paragraph
15.460.
55.
Re Hefferon Kearns
(No.2) 11993] 3 IR
191.224.
56. Companies Act 1985 s.3()0, which were
replaced by the provisions of s.6 of the
CDDA 1986.
57.
Re Lo-Line Electric Motors
[1988] Ch. 477,
486.
58. Ibid p.486.
59. [1988] BCLC 329.
60. Ibid p.333.
61. Ibid p.340.
62. [1989] BCLC 556.
63. Ibid p.559.
64. [1992] BCLC 686.
65.
Re Douglas Construction Services Ltd.
11988] BCLC 397.
66.
Re Churchill Hotel (Plymouth) Ltd
[1988]
BCLC 341;
Re Majestic Recording Studios
Ltd\
1989] BCLC 1.
67.
Re Douglas Construction Services Ltd
(op
cit).
68.
Re CU Fittings Ltd
(op cit).
69. op. cit.
70. Ibid p.219.
71. Jackson v. Munster Bank e.x parte Dease
(1885) 15 LR Ir 356.
72. (op cit).
73. Ibid p.224.
74. s.l50(2) (a).
75.
Kelly
v.
Scales
[ 19941 1 IR 42.
76. Ibid p.44.
77. op. cit.
78. Ibidp.213.
79. Defined by s. 150(5) as either a licensed
bank or a company whose ordinary
business consists of the giving of loans or
guarantees in connection with loans.
80. Defined again by s.l50(5) as a company so
prescribed by the Minister for Employment
and Enterprise and whose principal
ordinary business is the making of share
investments.
81. s.l63(2).
82. s.l63(3).
83. s.l63(5).
84. s. 163(4).
85. s.l64.
86. High Court.
Costello
J. 22
November 1993.
87. s.l53.
88. s.160(2) (c).
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