The former chief executive of Dairygold has said that allegations he had fallen €4m into debt because of a promised payout on a bonus scheme are a “complete fabrication”.

Businessman Jerry Henchy (48) from Kilmallock, Co Limerick dismissed the suggestion that he had been unable to pay a balance of €140,000 on his farming account because he had already committed himself to the millions he expected to earn from the long-term incentive (LTI) scheme run by Dairygold subsidiary Reox Holdings, of whom he was also chief executive.

Henchy told counsel for Dairygold, Paul Gardiner SC that the suggestion, from Vincent Buckley was a lie. Gardiner told him that Buckley would say that Henchy put his head in his hands at a meeting on 14 January 2009 and told him that the Reox LTI scheme was the worst thing that had ever happened to him. “He said you said you wondered what John Moloney of Glanbia would think of you and what the industry would think of you.”

“That’s a complete lie.”

The father of two is suing his former employers for €8m in damages arising from his dismissal for “spurious reasons” to do with alleged financial irregularities with his farm account. He is also suing the co-operative for defamation over articles, which appeared in the national and international press subsequently. Dairygold contests all counts.

The court has already hear that Henchy’s farm account with Dairygold had been in arrears since 2007. Henchy denies telling Jim Woulfe, the head of agri-business at the co-operative, that he was waiting for his bonus for 2007 before he could make further payments on his account in 2008.

He told Gardiner that he had not been in a position to pay off his account because the bulk of his €600,000 salary was tied up. He said that he had paid €500,000 over two years in capital projects on his farm. He was also “aggressively” paying off the mortgages on both the farm and his house but told the court that he would have been able to cut down these payments if necessary. He told Mr Justice Daniel Herbert that he had never considered there to be any urgency in paying off his farm account.

Henchy said he had paid Woulfe €15000 in January 2008 so that his account was not viewed as non performing by the independent auditors. He said he did not consider making the payment earlier in month so that the amount could have been taken as part of the end-of-year finances.

Henchy said he had been surprised when a question was raised at the Dairygold AGM in May of that year concerning debts owed by senior management. He had known that the question referred to him, at least in part. Gardiner told him that his account could have been viewed by any of the staff in one of Dairygold’s shops when he made a purchase.

Henchy said he had been pleased when his account was taken off the public system but said he did not remember being told of this beforehand by the chief financial officer, Michael Harte. Henchy told Judge Herbert that he had not received any further statements on his account once this had occurred. He considered this important.

“You had ignored the past two years of monthly statements,” Gardiner told him. “You filed them, possibly in a very neat filing cabinet, but you didn’t deign to pay them.”

Gardiner told the court that Buckley and Harte had been acting to save Henchy’s embarrassment and the consequent damage to the company.

Henchy denied telling Buckley that he acknowledged he had but both the chairman and the society in an awkward position. He disagreed that Buckley had told him the situation was unacceptable and that the balance should be paid by the year end. He also denied telling Buckley that he could not pay the balance.

The court heard that the following December Henchy had made no further payments. Henchy said he had not made a commitment to Buckley to pay the balance by the year’s end.

Henchy said he had met with Harte on December 15 2008. Harte had handed him his bill, saying “Merry Christmas” and asked Henchy if he was going to pay. Henchy told the court that because of the time of year and everything that was going on in the business “I would have assumed he meant year’s end.”

Henchy agreed that he again did not make a payment but had subsequently paid €40,000 in January. He denied saying that he could not pay the account. Gardiner told him that Buckley and vice-chairman Bertie O’Leary had taken legal advice and had been advised to take the matter before both the board of Dairygold and the audit committee.

Henchy said that he had expected the board meeting would be personally embarrassing but said he did not see the point in worrying about things that couldn’t be avoided.

The case continues tomorrow at the Four Courts in Dublin.