Firm directors should be liable for €3.2m debts, court told

TWO directors of a building company which went into voluntary liquidation should be made personally liable for its €3.2 million debts — including €2.1m in under-declared tax liabilities — it was claimed in the High Court yesterday.

Peter Killeen and Lorraine Higgins, who were the only directors of PSK Construction Ltd, should be made liable and should be disqualified or restricted from future involvement in companies, the liquidator of the firm claimed in the proceedings which opened yesterday.

The Naas-based firm employed around 160 workers in sub-contracting work on major sites around Dublin before it went into liquidation in March 2006.

The liquidator, Tom Kavanagh, claims Mr Killeen was a party to the carrying on of the business of PSK with intent to defraud creditors of the company. It is also claimed Mr Killeen and Ms Higgins carried on the business of the firm in a reckless manner.

Mr Killeen, who was the managing director of the company, claimed he continued operating the business after the problems started in an effort to trade out of its difficulties.

The liquidator wants orders making both directors personally liable for the company’s debts, along with damages for alleged breach of duty and breach of trust. He also wants an order requiring Mr Killeen to repay personal expenses allegedly incurred by Mr Killeen using a company credit card.

Mr Killeen was the managing director of the company while Ms Higgins was more involved in office organisation, but was also a signatory to the company accounts as one of its directors, the court heard.

Opening the case Lyndon MacCann, counsel for the liquidator, said the company was first established in 2002 and had traded successfully until 2005.

However, it got involved in two major projects at Sir John Rogerson’s Quay and Beacon Court in Sandyford, Dublin, which led to it trading while insolvent for a considerable time.

As a result of this, and in an attempt to continue trading, counsel said, the total amount of tax which was under-declared for 2005 was €2.1m.

This had the knock-on effect of increasing debts to creditors, and it was not “a sole victim type of insolvency”, counsel said. It was a “deliberate scheme of wrongdoing on the part of Mr Kileen to lie to the Revenue” as to what the companies tax exposure was, counsel said.

Mr MacCann said that after the withdrawal by the Revenue of the company’s certificate of authorisation to carry out works (C2 certificate), a new company, with Mr Killeen’s son as a director and another woman, was set up to take over the jobs it already had under way.

In affidavit from liquidator Tom Kavanagh, it was stated that among the other matters at issue were that PSK was not placed in liquidation in a timely fashion and that the company had fraudulently preferred AIB Leasing Ltd and AIB Finance Ltd.

It was also claimed Mr Killeen had knowingly purchased €29,000 worth of tarmacadam stolen from the N7 road, and that the company breached provisions of the Companies Acts by loaning money to Mr Killeen.

Mr Kavanagh said it appeared PSK was kept alive as a going concern from February 2005 by trading using monies owed to the Revenue and allowing huge tax arrears to build up.

The case continues.