The High Court has heard that an investor’s application for the appointment of a taxpayer-funded inspector in a Christmas tree company is “without precedent”.
The official for the Office of the Director of Corporate Enforcement (ODCE) said there does not appear to be any previous instance where the applicant for the appointment of an inspector for a firm was a person other than ODCE or the Minister of Justice.
In a departure from the status quo, this application relating to WFS Forestry Ireland Ltd is “breaking new ground”, said Neil Stein SC for ODCE.
The “enormous” evidence, the lawyer said, is that this company is “disappointingly insolvent” based on the balance sheet and because it is unable to pay its debts as they are due.
A more appropriate approach to the situation, the lawyer said, could be the appointment of a liquidator.
ODCE was not opposing the application, but it is interested in the development of legislation that could be derived from this case.
Mr Stein urged the court to consider whether the issues raised were of public or private concern. The taxpayer pays the bill of inspection, although it has the potential to cover the costs, while the company’s creditors, at least to some extent, assume the burden of liquidation, he said.
Mr Stein said the applicant in the case, John Kearney, and the 17 other alleged investors supporting his application are primarily interested in seeing their money back.
They invested in a limited company hoping to see substantial returns, and there is a risk associated with it, he said.
“The applicant wants to transfer that risk from the creditors to the taxpayer,” he said.
Investors say WFS Forestry, which has its registered office at Fitzwilliam Business Centre, 26/27 Pembroke Street, Dublin 2, failed to deliver the returns they were promised. They claim that they were misrepresented and were sold stakes in forestry land which does not exist. The claims are denied.