Man and mother cannot be company directors for five years, High Court rules

A businessman and his mother cannot act as company directors for five years after the High Court found they failed to keep proper books and records for their liquidated hairdressing supplies and beauty treatments business.

Man and mother cannot be company directors for five years, High Court rules

A businessman and his mother cannot act as company directors for five years after the High Court found they failed to keep proper books and records for their liquidated hairdressing supplies and beauty treatments business.

Warren Logan was executive director of Hairspray Wholesalers Ltd, Fashion City, Ballymount, Dublin, and his mother Dolores MacKenzie was a non-executive director.

On May 1, 2013, it was voluntarily wound up and a liquidator appointed.

Liquidator Jim Luby later sought orders from the High Court restricting them from acting as directors or being involved in the formation or promotion of any company for five years, subject to conditions, because of their conduct of the firm's affairs.

Granting the orders, Mr Justice Senan Allen said Mr Logan and his mother blamed their accountants for the historical issues as a significant part of what led to the liquidation.

The judge said those historical issues were that proper books and records had not been kept and there was an issue as to the extent of the company's liabilities.

The judge did not understand how it was hoped the liquidation would obviate the need to deal with the deficit in the books and records. Mr Logan and his mother said it was a choice between making up books and records and liquidation, and they chose liquidation.

They not only did not keep proper books but did not prepare annual accounts or make returns to the Companies Office. The books and records deficit dated back to at least 2011, but was not addressed until the company went into liquidation two years later, the judge said.

The fact that the directors had only a vague, and in the event, quite wrong idea of the extent of the company’s Revenue liabilities, and none at all of the liability to directors, was in the judge's view "evidence of irresponsibility".

The directors claimed their formal education was limited and Mr Logan said he had dyslexia. However, they were experienced business people and the fundamental problem was not the ability to understand complex documents but the "absence of relatively straightforward books and records".

They also admitted the company’s Revenue liabilities are nearly twice what they thought them to be at the date of liquidation, he said.

They further admitted they had no idea where the figure of €431,655 shown in the statement of affairs for directors’ loans came from, he said.

He rejected their argument that the absence of proper books and records did not contribute to the insolvency.

While Mr Logan was active in the day-to-day business and his mother was a non-executive director, they had met the liquidator's application for restrictions on them together and on the same basis. There was no basis to differentiate between them.

The judge was not satisfied they acted responsibly in relation to the conduct of the affairs of the company and made the five-year restriction orders against both.

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