Directors May Face Huge Legal Bills

THE DIRECTORS of the insolvent companies in the Zoe Group seeking court protection may be personally exposed to paying the costs of the action if the second bid to appoint an examiner fails. The High Court heard yesterday that the fresh attempt to seek protection for seven companies in the group was brought after the passing of resolutions by two directors.

Mr Justice John Cooke noted that instructions were given by Róisín Carroll, wife of property developer Liam Carroll and a 50 per cent shareholder in Showlay, the ultimate owner of the group, that the petition be taken as Mr Carroll had been in hospital and was unable to give directions. The judge observed in his ruling yesterday that it had been noted during the preliminary hearing to decide if the petition should be heard that the action was being taken following a decision by directors rather than the members (shareholders) of the companies.

Legal sources said that David Torpey and John Pope, directors of the companies, may personally be exposed to the costs of the second petition, if it fails, as they passed resolutions as directors to make the second application. In contrast, Mr Carroll, a 50 per cent shareholder in Showlay, had – with Mr Torpey and Mr Pope – approved the first petition for protection in his capacity as a director on the morning of July 17th, the day that application was made. Lyndon MacCann SC, counsel for ACCBank, which is opposing the second petition, noted in court last week that directors may take a legal action in a company’s name without shareholder approval. Legal costs in the second petition are thought to be running well in excess of €100,000, with ACC’s costs estimated to be at least €50,000 as the matter has been before the court on four days. The first application was before the High Court on four days and the Supreme Court on two days.