THE COMMERCIAL Court will hear an application next month to strike out proceedings in which the former chief executive of Smart Telecom plc, Oisín Fanning, wants to cancel the €1 management buyout of the company on grounds of alleged unlawful and oppressive conduct of the affairs of the company by businessman Brendan Murtagh and others.
Mr Justice Peter Kelly yesterday fixed June 17th to hear an application by Brendan Murtagh and his sons Alan and Fergal to have the entire action struck out. The Murtaghs have claimed Mr Fanning's action is "opportunistic".
The court will also, on June 17th, deal with Mr Fanning's application for leave to have the case heard as a derivative action - an action by a minority shareholder in a company in circumstances where the company itself has not taken action.
The case was before the judge yesterday to deal with case management issues.
David Barniville SC, for Smart, said the company itself would not be taking an active part in the case. It would adopt an essentially neutral approach, would abide by the orders of the court but would respond to some of the claims made, counsel added. There had been a number of "personal" claims by Mr Fanning.
John Breslin, for the Murtaghs, secured leave to file an affidavit responding to Mr Fanning's application to have the case heard as a derivative action.
In his action, Mr Fanning claims Brendan Murtagh "effectively controlled" Smart from 2005 and that when Mr Murtagh realised that, in order to take the company private, he would be required to pay market price for it as advised by Davy stockbrokers, he had embarked on a course designed to jeopardise the cash flow of the company.
Mr Murtagh and his sons Alan and Fergal had directed Mr Fanning and the other directors of Smart to act in accordance with the Murtaghs' instructions, although it was clear the Murtaghs were not acting in the best interests of Smart but in their own interests, Mr Fanning has claimed.
He alleges the company was sold at a "gross undervalue" as it did not take into account monies owed to Smart by Brendan Murtagh or the estimated €95 million value of the option to purchase 90 per cent of BCCL (Broadband Communications Ltd) from Mr Murtagh.
Mr Fanning also claims Smart has paid him just €250,000 of a €650,000 severance agreement and had also ceased paying interest on a €5 million loan secured by him, on what he claims was the urging of Mr Murtagh, from Anglo Irish Bank.
Mr Fanning, of Forenaughts House, Naas, Co Kildare, who founded Smart in 2000 and resigned as a director of the company in September 2006, has made serious allegations about the conduct of the Murtaghs, particularly Brendan Murtagh, in relation to the affairs of Smart.
He wants a declaration that the business purchase agreement of October 2006 between Brendan Murtagh and Smart, under which Mr Murtagh purchased the assets of the company, including all subsidiaries and undertaking of the business of the company, for €1 plus 10 per cent of the entire equity share capital of Smart Yuroe Broadband Ltd, is null and void.
He also wants a court order cancelling the entire transaction, wants the defendants to buy out his (Mr Fanning's) shareholding at a price fixed by the court, and various other orders.
