A High Court judge has refused to grant the liquidator of Pierse Contracting orders restricting four directors of the company.
Pierse, then employing 109 people, was wound up in November 2010 with a deficit of €212 million. Liquidator Simon Coyle claimed the directors should have realised by April 2009 it was insolvent.
Restriction orders were previously made against five former directors – Fearghal Nolan, Martin Murphy, Michael O'Reilly, Matthew Duggan and Brendan Cahalin. The five told Mr Coyle they believed they acted honestly and responsibly in the conduct of the company's affairs but were not financially able to oppose the liquidator's application.
Mr Coyle also sought orders, under section 150 of the Companies Act, against former chief executive Charles Norbert 'Nobbie' O'Reilly, (from 2005), chairman Ged Pierse, worker director Michael McNamara and non-executive director Kieran Duggan. They opposed the orders.
In his judgment, Mr Justice Brian Cregan ruled Mr Coyle had failed to show the directors had not acted responsibly. He found they had acted responsibly in their stewardship of the firm.
Mr Coyle had fairly said there was no evidence suggesting the directors acted other than honestly in their conduct, the judge noted. There were also no allegations of other failures, such as to account properly to Revenue or to deal fairly and honestly with employees and subcontractors.
The firm’s accounts showed it went from making a profit of €17 million in 2007 to losses of some €16 million in 2008 and €30.9 million in 2009.
Profitable workload
In 2009, when Mr Coyle said the directors should have liquidated the firm, it had a substantial and profitable workload; the banks were continuing to support it and it had reduced its level of overdue creditors from €16.5 million to €8.4 million.
Given the property and financial collapse, the directors did “what any responsible directors would do”: cut costs and overheads, took reductions in salaries and pensions, reduced creditors when possible and agreed with creditors on a “pay when paid” approach.
It was significant that directors put in over €10 million of their own funds into the company, he said. It was the “very essence of taking responsibility as a director for the proper conduct of the company”.
