A steel fabrications company that was a subcontractor to a firm building a new hangar at Shannon Airport is seeking orders from the Commercial Court making three directors of the main contractor liable for €20.6 million debts following liquidation.
O’Sullivan Fabrications Ltd, with registered office in Dromcollogher, Co Limerick, a company specialising in structural steelwork, was a domestic subcontractor to L&M Keating Ltd, which was named as the contractor for the construction of the new Shannon hangar.
O’Sullivan is suing James (Jim) Murphy, Liam Dowd and Gordon O’Regan, directors of L&M Keating, which went into liquidation, following an unsuccessful examinership in October 2020, with debts of €20.6 million.
The directors deny they are personally liable and say they have been found to have acted honestly and responsibly in their conduct.
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O’Sullivan claims it is owed €417,411, which was outstanding from a €2.9 million contract it had with L&M Keating for steel in the new hangar. O’Sullivan says the sum was awarded after arbitration at which L&M Keating said the money was not due and that the works were defective.
O’Sullivan claims the L&M Keating directors should be made personally liable for all the debts. This is because the three knew or ought to have known, had full enquiries been carried out or had the information been disclosed and taken into account, that L&M was in serious financial difficulty, which was exacerbated by the advancement of a €6.1 million loan to a company called All Waves Holding Ltd in 2019, it says.
The approval of this loan, which was to acquire its own shares, materially contributed to the subsequent examinership and liquidation of L&M Keating, the O’Sullivan firm claims.
On Monday, an application by two L&M directors, Dowd and Murphy, supported by O’Regan, to have the case entered into the fast track Commercial Court was granted by Judge Eileen Roberts. It was opposed by O’Sullivan.
The judge said that while on the face of it the amount involved did not meet the €1 million threshold for the commercial list, in all the circumstances where she was told, among other things, that the outcome would have an impact on the liquidation itself, she was admitting it to the list.
In an affidavit on behalf of Dowd and Murphy to have the case admitted to the list, Dowd said insolvency was due to a combined and collective series of events including Covid-19 and Brexit.
He said the joint liquidators of L&M Keating had found, in a report for the Director of Corporate Enforcement, that their investigation found that its directors had acted reasonably, responsibly and honestly.
Dowd said he has been advised the liquidation was progressing and should conclude in coming months. However, he said, there would have to be a final creditors’ meeting and it would be inappropriate and prejudicial for that meeting to take place while these legal proceedings remain unresolved.
He also said that Murphy and himself – who, the court heard, are both approaching 70 – have had long careers as businessmen and have conducted their affairs with honesty and integrity.
He said they were at a stage of their lives where their good names and commercial reputations were of the utmost importance to them. This was among the reasons they were seeking to have the matter dealt with as soon as possible.
The court also heard that an application for security of costs against O’Sullivan would be dealt with in October.
