High Court grants liquidator of Meath department store restriction orders against two brothers

By Ann O'Loughlin

A High Court judge has granted restriction orders under the Companies Act against two brothers over the conduct of the affairs of a company which operated the well known McElhinney’s department store in Co Meath.

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Clarification

McElhinneys for Men in Athboy have asked us to point out that they have no involvement with McElhinneys Fashions closure.

McElhinneys for Men point out they are a separate legal entity and continue to open for business and are, in fact, celebrating 55 years in business on November 24.

We are happy to clarify this

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A one month stay applies before the orders, which apply for a five year period, come into effect.

Granted under Section 189 of the Companies Act, the orders restrict Neal Sweeney, described as a “de facto” director of McElhinney Fashions Ltd, and Aonghus MacSuibhne, a director of the company, being directors of any company unless it meets specified capital requirements.

The orders were sought by Derek Ryan, whom the High Court appointed liquidator of the company in late 2015 after it was wound up on the petition of the Revenue.

A dispute over a €2.34m loan owed to Bank of Ireland lead to separate long running court proceedings between a bank-appointed receiver, Barry Forrest, and some members of the McElhinney family.

In his application, Mr Ryan alleged Aonghus MacSuibhne, Macroom, Co Cork, and Neal Sweeney, with an address at Athboy, had failed to co-operate with him and had not acted honestly and responsibly in relation to the company’s affairs.

Both brothers, who represented themselves, denied those claims and said they acted in the best interests of their family company and its employees during a difficult time. Neal Sweeney also said he was general manager of the company and not a director.

Both said they had difficulties accessing company records after a receiver was appointed to the company.

In repsonse to claims lack of documents meant the liquidator is still unable to process redundancies payments, Neal Sweeney said they had had difficulties accessing company documents after the bank receiver was appointed and would never disenfranchise employees of their rights from a redundancy viewpoint.

In his decision, Mr Justice Robert Haughton said it was clear Neal Sweeney was “absolutely central” to operations of the company in the lead up to its winding up, was a “de facto” director clearly centrally involved in the company’s day to day management and must bear primary responsibility for the failure to keep proper books and records.

While some records were handed over, it did not appear any computerised records were made available to the liquidator.

The liquidator was unable to find and was not provided with proper books and records, only loose boxes of invoices, and this fed into the liquidators continuing inability to process redundancy payments of employees, he said.

While it might be suggested Aonghus MacSuibhne was a "passive" director, Mr MacSuibhne himself did not say that and the onus was on him to co-operate with the liquidator and fulfil his duties as a director, the judge said.

He ruled both brothers should be restricted over failure to provide a proper statement of affairs.

There was "no excuse" for failures to file annual accounts for 2013 and 2014, he also said.

Earlier in his decision, the judge noted Neal Sweeney had set out the background for the failure of the company, a family business established in 1937. At "a human and social level", it was "sad" the business had failed as it was a substantial employer at one stage, he said.

It appeared the business was restarted under this company’s name from 2010 with 36 employees, was a victim of the global recession and had historical debt carried through from another business which may be the reason it had failed, he added.


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