Restriction orders sought against four pilot college directors

A liquidator is seeking restriction orders under the Companies Acts against four directors of a pilot training college which collapsed nearly four years ago owing some €5 million in fees paid by students.

Michael McAteer, liquidator of the Waterford-based Pilot Training College of Ireland (PTCI), wants orders against managing director Mike Edgeworth and three non-executive directors, George Michael Edgeworth – a son of Mike Edgeworth – Anthony Howard Kember and Judith Mary Kember.

PTCI was wound up in 2012 with debts of some €9 million, most of it owed to students. The Kazakhstani national carrier Air Astana was its largest corporate creditor.

The court heard the liquidator was particularly concerned about how a loan for €1.6 million from PTCI to a related company, Shemburn, was written off in 2008 and then another €1.6 million loan was made to the same company without any form of security on it.

Both Edgeworths are opposing the application to restrict them as directors, claiming they acted at all times in accordance with advice.

A lawyer for Mike Edgeworth said he invested some €2 million in the business which had been run successfully for nearly ten years and was highly regarded in the pilot training industry.

Repayment scheme

The court heard the Kembers had written to the liquidator, saying while they were not consenting to the orders, they did not wish to appear in court to contest them.

While there was no accusation of dishonesty against the directors, the providing of the second loan was not the behaviour of responsible directors, particularly as no evidence of a repayment scheme for the loans had been provided, John Kennedy, for the liquidator, told Mr Justice Robert Haughton.

Mr Justice Haughton said this was an unusual case involving €5 million owed to “unfortunate students” who had paid large sums in advance fees.

Shemburn, itself liquidated in 2013, was set up so PTCI, as a zero-registered VAT entity, could ensure VAT paid on aircraft equipment it leased could be claimed back.

While this was acceptable business practice, there had been no explanation as to why a second loan was made to the same company after another for a similar amount was written off, Mr Kennedy said.

Mike Edgeworth had provided an inadequate statement of affairs in which he identified €314,000 of realisable assets when the liquidator had found just €7,000 of such assets, counsel said. This was a 97 per cent over-estimation of realisable assets, he said.

The case continues.