Persistent non-compliance with the Companies Acts leads to S. 213(f) order

Persistent non-compliance with the Companies Acts leads to S. 213(f) order

Fuerta Limited & Companies Acts [2014] IEHC 12, 22/01/2014, Charleton, J.

The company in this case, Fuerta Limited, was incorporated to participate in the development of a nursing home in Marlay Park. The petitioner, Bank of Scotland, made available a loan facility of up to €15 million pursuant to a structure in respect of which the company held a 61% stake in the investment in conjunction with a number of individual investors who made up the balance of the 39%. Bank of Scotland sought to enforce the security on that loan, but a sale of facility could not proceed without either the compliance of the company or through a liquidator controlling the company. The directors of the company did not respond in any positive way to a series of approaches and Bank of Scotland brought a petition pursuant to section 213(f) of the Companies Acts 1963 to wind up the company on the grounds that it was "just and equitable".

Charleton J. noted that while section 213(f) applications apply predominantly to situations of deadlock or oppression, this is not exclusively the case. He went on to state that although a company should not be wound up on the just and equitable ground due to non-compliance with the code of company law where other avenues are available, this may be invoked as a basis for doing so in extreme circumstances: for example, where there is a serious lack of compliance, coupled with an absence of reasonably available alternative steps and in the context of existing or impending prejudice. This threshold was met on the facts of case. The company had persistently failed to file annual returns, even after being struck off and reinstated. Charleton J was satisfied there was no realistic prospect of any other avenue being open to resolve this situation and ordered that the company be wound up.

Contact our Corporate Commercial Department for further information.