High Court may rule on Burke restriction order

A High Court judge may rule tomorrow on an application for an order restricting Fianna Fáil activist Joe Burke from acting as a company director for five years unless certain conditions are met.

A restriction order under Section 150 of the Companies Act prevents persons acting as company directors or being involved in a company unless certain capital funding conditions are met.

The order against Mr Burke is being sought by Kenneth Fennell, liquidatior of J & H Burke & Sons Builders Ltd, which was wound up in late 2006. Similar restriction orders have already been made against Helen Burke, Mr Burke's estranged wife and former financial controller of the firm, and against Brendan O'Reilly, a former director and pperations manager of the firm.

The hearing of the application concluded today and Mr Justice Kevin Feeney said he hoped to rule on it tomorrow.

Mr Fennell claims Mr Burke acted irresponsibly in allowing his firm trade for more than two years while insolvent and should have known of the extent of the firm's difficulties from 2004 onwards.

The court heard the company had traded profitably for several years but its primary business of fitting out and refurbishing bars was severely affected by the 2004 smoking ban after which it lost contracts valued at €3 million and incurred substantial losses.

In seeking the order, Gary McCarthy, for the liquidator, stressed there was no allegation of dishonesty being made against Mr Burke. The judge remarked the company appeared to have been a good employer which properly paid its employees.

Mr McCarthy said the liquidator was making a number of complaints, particularly that Mr Burke should have moved earlier to wind up the firm.

There was a question mark over when exactly Mr Burke became aware of the true financial position of the company. Mr Burke said he was first aware of the true state of affairs in autumn 2006 but the liquidator argued he should have been aware earlier as the relevant information was available from 2004, even if not collated.

The complaints by the liquidator also include failure to pay Revenue and tax debts of some €279,000 and failure to file returns in the period leading up to its liquidation; failure to file audited accounts for 2004 and 2005; failure to prepare management accounts and a delay in making a payment of some €8,000 to the pension fund.

Opposing the application, Mark Sanfey SC, for Mr Burke, said a restriction order was not warranted in the context of Mr Burke's overall record in relation to the company. Mr Burke was not a person against whom the public required to be protected, counsel said.

It was important to Mr Burke the liquidator has accepted he was honest, counsel added. The only issue was whether he was irresponsible in the conduct of the company's affairs and he contended he was not.

Mr Sanfey said this was a reputable and profitable company until the smoking ban effectively demolished its business. After that, Mr Burke found himself in a firefighting situation. He was also separating fom his wife during this time which was a distraction and affected his ability to liquidate assets and inject more money into the company.

Mr Sanfey said Mr Burke was the primary creditor of the company, being owed some €450,000 and was prepared to forego that debt, making more money available for creditors. He had also used his own monies to pay employees.

While financial accounts for the year to the end of December 2005 showed a loss of €688,000, most of that was owed to Mr Burke and he believed, once his marital separation was finalised, he could secure more finance and the company would be saved.

While Mr Burke accepted he had a responsibility in relation to financial records and tax returns and should have attended to its finances more closely, that was not his primary task within the company, Mr Sanfey said. The required financial informaiton as in any event available even if not in the form of management accounts. Mr Burke's role was to get new contracts and, until he received financial details from his accountants about autumn 2006, he had believed he could rescue the company.