Traffic Group Ltd -v- Companies Acts [2007] IEHC 445 (20 December 2007)

Traffic Group Ltd -v- Companies Acts [2007] IEHC 445 (20 December 2007)

Although there was a significant lack of candor and inappropriate action (granting of a charge to BOSI) by the petitioners, these were not so gross as to justify refusal to confirm the scheme, especially as remedial measures (treating BOSI as unsecured and petitioners' undertaking not to act as directors for 18 months) neutralised potential benefit to wrongdoers. The statutory objective of preserving the enterprise and jobs outweighed the petitioners' failings.

Citation
[2007] IEHC 445
Parties
Company in Examination: Traffic Group Ltd; Examiner: Martin Ferris; Objecting Creditor: Revenue Commissioners; Petitioners: Petitioners (principals of Traffic Group Ltd)
Jurisdiction
Ireland
Judgment Date
20 December 2007
Procedural Posture
Company Law Examinership / Application to Confirm Examiner's Scheme Under Companies (amendment) Act, 1990
Outcome
Scheme confirmed subject to undertakings.
Legal Topics
Examinership, Scheme of Arrangement, Fraudulent Preference, Disclosure Obligations, Judicial Discretion in Confirmation of Schemes
Company Law Insolvency Law Examinership Scheme of Arrangement Fraudulent Preference Disclosure Obligations Judicial Discretion in Confirmation of Schemes

Case Brief

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Parties

Traffic Group Ltd

Company in Examination

Martin Ferris

Examiner

Revenue Commissioners

Objecting Creditor

Petitioners (principals of Traffic Group Ltd)

Petitioners

Procedural Posture

Company Law Examinership / Application to Confirm Examiner's Scheme Under Companies (amendment) Act, 1990

Legal Issues

  1. 1 Whether lack of candor and inappropriate actions by petitioners justify refusal to confirm examiner's scheme
  2. 2 Whether the scheme is unfairly prejudicial to the Revenue Commissioners as a creditor
  3. 3 Whether remedial measures can neutralise wrongful actions of petitioners

Ratio Decidendi

Although there was a significant lack of candor and inappropriate action (granting of a charge to BOSI) by the petitioners, these were not so gross as to justify refusal to confirm the scheme, especially as remedial measures (treating BOSI as unsecured and petitioners' undertaking not to act as directors for 18 months) neutralised potential benefit to wrongdoers. The statutory objective of preserving the enterprise and jobs outweighed the petitioners' failings.

Court Disposition

Scheme confirmed subject to undertakings.

Orders

  • Scheme of arrangement confirmed under Companies (Amendment) Act, 1990.
  • Petitioners to give undertaking not to act as directors of Traffic Group Ltd for 18 months.