Burke may face restriction order after court ruling

A High Court judge has ruled an order should be made to restrict Fianna Fáil activist Joe Burke from involvement in the affairs…

A High Court judge has ruled an order should be made to restrict Fianna Fáil activist Joe Burke from involvement in the affairs of any company for five years unless certain capital funding conditions are met.

Mr Justice Kevin Feeney said today a restriction order under Section 150 of the Companies Acts was merited because Mr Burke had not acted responsibly, in clear breach of the Companies Act, in relation to aspects of the conduct of the affairs of his building company, J & H Burke & Sons Builders Ltd, which was established in 1995 and wound up in late 2006.

The judge adjourned the making of an actual order to Friday when he will hear whether Mr Burke intends to appeal the decision and to seek a stay on his order pending any appeal.

The Section 150 application was brought by Kenneth Fennell, the liquidator of Mr Burke's company. Mr Burke argued the order was not warranted as there was no allegation of dishonesty and he genuinely believed he could raise adequate finance to help the company, whose main business was pub refurbishment, overcome losses sustained following the March 2004 smoking ban.

The judge found Mr Burke had acted irresponsibly in not arranging for the preparation and filing of accounts, including audited accounts, for the company for 2004 and 2005; in failing to inquire about the true financial position of the company and in allowing the company trade and build up tax debts when it was insolvent.

The judge said the company was insolvent, on its books at least, from August 2004 on. Mr Burke knew the company was in trouble but was unaware of the extent of its difficulties through 2004, 2005 and 2006 and this meant financial decisions were being made by him "more in hope" rather than a real knowledge.

While the court was satisfied Mr Burke believed he could raise the necessary capital for the company from his own assets, a director acting responsibly must know the true financial position of a company.

The judge added there was no question of any lack of honesty by Mr Burke who also acted honourably in ensuring employees were paid, to the point of paying them out of his own pocket. Mr Burke had also tried to save the company's business, kept proper books and records up to the time of the company's difficultes and had waived a €450,000 debt owed to him by the company. The books and records kept also contained the necessary information which enabled the liquidator to arrange for proper accounts to be produced.

However, the judge noted, the last audited accounts for the company prior to autumn 2006 at the earliest were for the year ending August 2003. Mr Burke had a responsibility for ensuring accounts were prepared for the intervening years.

By the end of 2006, the company had accumulated losses of more than €900,000 with about half of that amount owed to Mr Burke. Mr Burke was effectively the sole director from April 2006 and continued to trade till autumn 2006 with no real knowledge of the extent of the company's difficulties.

On other complaints by the liquidator about a delay in making an €8,000 payment to the company's pension fund, the judge ruled Mr Burke had given a credible explanation for that and there was no deliberate attempt to avoid contributing to the fund.

The judge also found the company's failure to file tax returns was relatively recent and that eventual tax liabilities of some €279,000 were incurred mainly in its last six months when Mr Burke was ignorant of the true financial position.

Earlier this year, similar restriction orders were made, on an uncontested basis, against Helen Burke, Mr Burke's estranged wife and former financial controller of the firm, and Brendan O'Reilly, a former director and operations manager of the firm.

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times