The liquidator of a meat processing company has asked the High Court to make the firm’s directors personally liable for debts of €2.7 million owed to parties including over 100 farmers and businesses in the north-west.
John Healy, who is the official liquidator of Edenmore Meats Ltd., seeks the orders against the firm’s directors businessmen Donal Gallagher and Richard Burke, as well as Robert Daly who resigned as a director in 2017, but remained as the firm’s company secretary.
He claims that when they ran Edenmore Meats, which operated what was described as a substantial meat processing facility in Lifford in Co. Donegal, they operated the firm in a reckless manner and allowed it to continue trading when it was clearly insolvent.
It is claimed that the three directors came on board in late 2014, early 2015 after a company called Twin Estates linked to UK-based Gallagher invested €1.4 milion in Edenmore.
It ceased trading in 2016.
High Court
Represented by senior counsel, John Kennedy, with barrister Brian Walker instructed by solicitor Daniel Hughes, the liquidator said that all three should be disqualified from acting as a company director or officer for a period of at least five years.
He also called for them to be made personally liable for the company’s debts and liabilities of approximately €2.7 million of which €1.5 million is owed to farmers who were never paid for the animals they supplied to the business.
The applications are opposed by the directors who strongly deny all allegations of wrongdoing against them.
Represented by senior counsel, Gary McCarthy, with barrister, Hugh McDowell, the directors claim that the company was already in trouble when they came on board.
They claim they acted honourably, responsibly and honestly at all times.
They said they had been hopeful of rescuing Edenmore, but said that was ended in October 2016 when the business’ Lifford facility was unlawfully occupied.
It was a source of deep regret that they were not able to turn the business around, they have claimed.
Investment in meat processor
Ultimately, Gallagher claims his investment in the firm was “an unmitigated disaster” for him personally and he remains the firm’s biggest creditor.
Gallagher, a successful and experienced businessman, said he had reluctantly invested the money through a company of his due to his connections with Donegal and the company whose former majority shareholder was his cousin Liam McGavigan.
Had Gallagher’s company not invested in the company in 2014, the losses incurred would have been greater than those incurred in 2016, it is also claimed.
The directors claim they took nothing out of the firm and put measures in place to resolve the companies difficulties and restore confidence with the farming community.
The court heard that the firm had advanced proposals to repay farmers, when in October, the facility it leased was taken over and occupied by Liam McGavigan, whose relationship with Gallagher had deteriorated, and persons allegedly linked to the paramilitary organisation the INLA.
The building was subsequently placed into receivership and sold.
McGavigan, who was the landlord of the premises at the time of the alleged occupation, has denied all claims of wrongdoing against him.
Following the occupation, the directors claim they were unable to access the facility, obtain any company records, file reports to the Companies Registration Office (CRO), and the company ceased trading.
Public backlash
It is claimed that following the cessation of trading, the directors, and members of the their families, were the subjects of protests, demands for payment, and were threatened and intimidated by individuals.
Opening the case this week (Tuesday, January 17), senior counsel for the liquidator told the court that “from the get go” of Gallagher getting involved and the directors being appointed, the company was insolvent.
Following the liquidator’s appointment by the High Court in 2020 after it had been struck off, John Kennedy said his client, John Healy, got little or no cooperation from the directors.
When books and records were eventually made available, counsel said that email correspondence between the directors showed that they knew that the company continued to trade when it was insolvent.
Counsel said the emails had made references about the firm’s trading position including expressing a concerns about the company’s trading position that “no cheques bounced today” with a smiley face emoji and that “there wasn’t a sausage in the bank”.
Counsel said that as part of his client’s case, the court will hear from farmers owed money by the company who along with their families “were left devastated” because they were not paid by Edenmore.
The farmers and businesses including marts “do not want the court’s sympathy”, Kennedy said, but “have come to the court seeking justice.”
The hearing before Justice Oisin Quinn continues and is expected to last for several weeks.
By Aodhan O’Faolain.