The High Court has appointed a provisional liquidator to a shipping company which claims it has become "hopelessly insolvent" due to apparent fraud by its managing director.
The order was made in relation to a Co Louth-based freight-forwarding business Fast Shipping Ireland Ltd, which employs nine people.
Following a probe of its financial affairs, the company claims its currently suspended managing director, Simon Mulvany, used its monies for his own benefit, including the purchase of two racehorses.
The firm, which primarily organised the uploading and transportation of goods shipped to Ireland mainly through Drogheda Port, is a subsidiary of Belgian company Fast Lanes Belgium NV.
On Thursday evening, Mr Justice Senan Allen appointed insolvency practitioner Nicholas O'Dwyer, of Grant Thornton, as provisional liquidator to the company, with a registered address at Ferris House, Constitution Hill, Drogheda.
The company has capital debts of €1.8 million and trade creditors of €1.4 million. It is owed just over €1 million by its debtors and has assets of €300,000.
It is clearly insolvent and unable to pay its debts as they fall due, the court heard.
In an ex-parte application, Brian Conroy BL, for the company, said recent financial investigations revealed the company is the victim of an apparent fraud conducted by Mr Mulvany.
Counsel said the firm’s owner believed for many years, from the financial information it was provided by Mr Mulvany, it was profitable and was solvent on a balance-sheet basis.
Arising out of concerns about Mr Mulvany’s financial reporting, counsel said the company information the Belgian parent received has been cast into serious doubt due to the apparent fraud committed against the company.
It is alleged Mr Mulvany significantly benefitted by using company monies for his own use. He was suspended by the company earlier this year.
Counsel said, arising out of its investigations, the company has discovered it had significant debts it never previously knew about. It was possible further debts may be revealed.
The company says the apparent fraud committed by Mr Mulvany involves monies advanced to the company as loans on foot of agreements signed by its MD.
Some of these loans, it claims, were disguised as payment for services provided to one of the company’s regular customers.
It is also alleged Mr Mulvany entered into agreements, using allegedly forged bank statements and documentation, for the sale and lease back of cranes not owned by the company but a third-party supplier.
It is further alleged two racehorses were purchased by Mr Mulvany and paid for by the company and regular payments were made by the firm to a UK-based racehorse trainer for Mr Mulvany’s benefit.
Counsel said Mr Mulvany had made certain admissions, including engaging in the manipulation of financial records, which he claims was done to improve the position of a related company, Fast Terminals Ltd.
He had co-operated with the investigation, but that co-operation was subsequently withdrawn, the court heard.
The company’s affairs have been probed by forensic accountants and it provided a report to the Garda National Economic Fraud Unit, counsel said.
The appointment of a liquidator would ensure an orderly winding up of the company and secure its assets, counsel said.
It is expected the company would have a lot of “angry” creditors, seeking to get paid, he said.
The liquidator will carry out a full and independent probe into the firm’s affairs, counsel said.
Counsel said the provisional liquidator could seek to continue to trade and hopefully sell the firm’s core business.
His client believes the company is still profitable and the sale of the business could save the employees’ jobs.
Mr Justice Allen, describing he company as clearly “hopelessly insolvent”, said he was satisfied to appoint Mr O’Dwyer as provisional liquidator and returned the matter to next month.