THE DIRECTOR of a building company which went into voluntary liquidation has been held personally liable for €1.6 million of its debts, the High Court has ruled.
Mayo-born Peter Killeen, a director of PSK Construction Ltd, Naas, Kildare, was also disqualified from involvement in the management of a company for seven years after the court found he was involved in fraudulent and reckless trading.
A co-director and employee of the company, office organiser Lorraine Higgins, was cleared of reckless trading but was disqualified for five years from involvement in the management of any company over her complicity in underdeclaration of tax by the company. The court also found both Ms Higgins and Mr Killeen failed to keep proper books of account.
PSK had employed about 200 workers in subcontracting on major sites around Dublin before it went into liquidation in March 2006 with debts of €3,186,737.
The liquidator, Tom Kavanagh, subsequently brought High Court proceedings claiming Mr Killeen was a party to carrying on the business with intent to defraud creditors and alleging both Mr Killeen and Ms Higgins carried on the business in a reckless manner.
Mr Killeen admitted in court he had underdeclared and underpaid PAYE and other tax liabilities to the tune of more than €1.6 million in 2005. The court heard the company did not employ a financial controller or accountant. The total liability to Revenue at the time of winding up was €2.36 million.
Ms Higgins admitted she was aware of the underdeclaration but said she had accepted Mr Killeen’s explanation this was a short-term measure which would be sorted when cash-flow problems were straightened out.
Ms Justice Mary Finlay Geoghegan yesterday found Mr Killeen had engaged in reckless and fraudulent trading. The judge said the liquidator had established, as a matter of probability, that Mr Killeen must have known that underdeclaring and underpaying the Revenue involved an obvious and serious risk of loss or damage to the creditors of the company.
Mr Killeen was also aware of serious loss-making difficulties which the company got into when he subcontracted for two major construction projects at Sir John Rogerson’s Quay in Dublin city centre and Beacon South Quarter in Sandyford, she found.
The judge found Mr Killeen had made an underdeclaration of tax for 2005 for a fraudulent purpose even though he had made a full declaration the following year which, she added, was to his credit.
Having regard to this, she found Mr Killeen personally responsible for the debts of the company, a sum of €1,604,526. She also disqualified him for seven years from involvement in managing any company.
While Ms Higgins was an employee and non-executive director and had acted under the direction of Mr Killeen, the judge said she was not satisfied she had sufficient knowledge about the company in March 2005 when the underdeclaration was made.
However, Ms Higgins ought to have known of the reckless trading and did not object, the judge said.
Given her complicity over a five-month period, Ms Higgins had rendered herself unfit to be involved in the management of a company for five years, she said.