The Gazette 1995

GAZETTE

MAY/JUNE 1995

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.

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 . 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. Conclusion

'phoenix

The avoidance of

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. 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. *Part 1 was published in the April Gazette. References

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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