Four former directors of Pierse Contracting, once Ireland's third-largest building contractor, are men of honesty and integrity who believed they were acting responsibly in allowing the firm continue trading beyond 2009, the High Court has been told.
Lawyers for the four have strongly rejected arguments by the company’s liquidator their conduct amounted to “wilful self-delusion” justifying the making of restriction orders against them.
Mr Justice Brian Cregan heard final arguments yesterday before reserving judgment on the application by liquidator Simon Coyle for restriction orders, under section 150 of the Companies Act, against former chief executive Charles Norbert "Nobbie" O'Reilly, chairman Ged Pierse, worker director Michael McNamara and non-executive director Kieran Duggan.
Restriction orders were previously made against five other former directors – Fearghal Nolan, Martin Murphy, Michael O'Reilly, Matthew Duggan and Brendan Cahalin. In correspondence with Mr Coyle, the five said they believed they acted honestly and responsibly at all times in the conduct of the company's affairs but were not in a financial position to oppose the application.
Pierse, then employing 109 people, was wound up in November 2010 with a deficit of €212 million and Mr Coyle claims the directors should have realised by April 2009 it was effectively insolvent.
In his application, Mr Coyle said he accepts the directors acted honestly and had invested €16 million of their own funds in the company but claims that was “throwing good money after bad”. His counsel, Mark O’Mahony, argued yesterday the directors’ optimism “became hubris, they proceeded without objectivity and lacked commmecial acuity”.
In submissions for Kieran Duggan, James Doherty argued that, in alleging the directors were wilfully irresponsible in permitting the company continue trade after April 2009, Mr Coyle was being unfair, utterly unrealistic and acting with the benefit of hindsight.
Mr Coyle’s view the firm’s accounts in 2009 were significantly overstated by tens of millions did not justify making restriction orders against his client, who with the other directors acted honestly and relied on professional advice from valuers and others when making financial projections, counsel said. The company’s bankers and bondholders had supported its efforts to continue trading, counsel added.
Pierse's auditors, KPMG, had signed off on the 2009 accounts as giving a fair and accurate picture of the company's finances and the general view then, shared by the banks, was Pierse's position could be turned around, he said.
Mr Doherty said Mr Duggan, as a non-executive director who had joined Pierse in 2005, was only there four times a year and had made proper inquiries and believed he was entitled to rely on professional and qualified staff. Mr Duggan had “a justifiable sense of grievance” as to why he was brought here at all, counsel said.
Counsel for Michael McNamara said his client was an engineer who in 2005 was headhunted and returned to Pierse. He was not looking to avoid consequences on the financial side but his experience was in relation to contracts and supervising those.