Court restricts former MD of collapsed electrical retailer

Declan O’Reilly ‘failed to act ... in a manner which the court could consider to have been responsible’

THE High Court has imposed a restriction on the former managing director of a chain of electrical retail stores which went into liquidation in 2011.

Declan O'Reilly, former managing director and principal shareholder in T O'Reilly (Electrical Supplies) Ltd, is restricted from involvement with any firm for five years unless it meets certain capital requirements under company law.

Ms Justice Mary Finlay Geoghegan said the court could not consider as “responsible” some of Mr O’Reilly’s conduct in the affairs of the company in the years before liquidation.

The judge noted he made incorrect disclosure in the 2010 financial statement about the payment of around €271,000 in rent for properties in Bray, Santry, Blanchardstown, Dún Laoghaire and Inchicore, which were owned by Mr O’Reilly or by companies ultimately controlled by him.

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Mr O’Reilly claimed this incorrect note in the firm’s abridged accounts was the result of an oversight by the company board at a time of great stress and was not an attempt to deceive creditors.

The court heard O’Reillys was established in 1968 by Mr O’Reilly’s father. In 1975, Mr O’Reilly became a director and subsequently managing director.

Turnover dropped by around 60 per cent between 2008 and 2011, primarily due to the collapse in the construction industry and decreased demand for electrical products.

The firm had bad debts of at least €400,000 while it had to pay 8.5 per cent of turnover in rents which was not sustainable, the court also heard. It also made loans of around €947,000 to related companies and had invested in a related company around €257,000 which is effectively not recoverable.

The judge said she was not satisfied Mr O’Reilly had acted responsibly on the basis of a number of matters.

These included that Mr O’Reilly had used the firm’s credit card for personal expenditure, the reclassification of rents without repayment and a significant amount of loans being made to related companies in the two years before liquidation – 2009 and 2010.

A sum of €88,374 paid to a company called Crenard Technology for Mr O'Reilly's remuneration was also reclassified as a management charge to that company, the judge said.

The judge said she had taken into account a number of positive matters including that, apart from the incorrect disclosure, there had been no criticism by the liquidator about book-keeping and records.

Nevertheless, it appeared to her, in the final years of trading, Mr O’Reilly “failed to act as a director in relation to the conduct of the affairs of the company in a manner which the court could consider to have been responsible”.