The High Court has appointed a provisional liquidator to a shipping company which has become "hopelessly insolvent" due to an alleged fraud committed by its Managing Director.
The order was made in relation to Co Louth-based freight forwarding business Fast Shipping Ireland Ltd, which employs nine people, whose finances appear "very bleak."
Following a probe of its financial affairs the company claims that its currently suspended MD Mr Simon Mulvany used its monies for his own benefit, including the purchase of two racehorses.
The firm, which primarily organised the uploading and transportation of good shipped to Ireland mainly through Drogheda Port, is a subsidiary of Belgian company Fast Lanes Belgium NV.
On Thursday evening Mr Justice Senan Allen said he was satisfied to appoint insolvency practioner Mr Nicholas O'Dwyer of Grant Thornton as provisional liquidator to the company, with a registered address at Ferris House, Constitution Hill, Drogheda.
The company has capital debts of €1.8m and trade creditors of €1.4m. It is owed just over €1m by its debtors and has assets of €300,000. It is clearly insolvent and unable to pay its debts as they fall due.
In an ex-parte application to the court Brian Conroy Bl for the company said that recent financial investigations revealed that the company is the victim of an apparent fraud conducted by Mr Mulvany.
Counsel said the firm's owner believed for many years the financial information it was provided by Mr Mulvany that it was profitable and was solvent on a balance sheet basis.
Arising out of concerns about Mr Mulvany's financial reporting counsel said that the company that the information the Belgian parent received has been cast into serious doubt due to the apparent fraud committed against the company.
It is alleged that Mr Mulvany significantly benefitted by using company monies for his own use and he was suspended by the company earlier this year.
Counsel said that arising out of its investigations the company has discovered that it had significant debts that it never previously knew about, and it was possible that further debts may be revealed.
The company says the apparent fraud committed by Mr Mulvany involves monies that were advanced to the company as loans, on foot of agreements signed by its MD.
Some of these loans, it claims, were disguised as payment for services provided to one of the company's regular customers.
It is also alleged that Mr Mulvany also entered into agreements, using allegedly forged bank statements and documentation, for the sale and lease back of cranes that were not owned by the company, but rather a third-party supplier.
It is further alleged that two racehorses were purchased by Mr Mulvany and paid for by the company, and that regular payments were made by the firm to a UK-based racehorse trainer for Mr Mulvany's benefit.
Counsel said Mr Mulvany had made certain admissions, including engaging in the manipulation of financial records, which he claims was done to improve the position of a related company called Fast Terminals Ltd.
He had co-operated with the investigation, but that co-operation was subsequently withdrawn, the court also heard.
The company's affairs have been probed by forensic accountants and it provided a report to the Garda National Economic Fraud Unit, counsel said.
The appointment of a liquidator would ensure an orderly winding up of the company and secure its assets, counsel said.
In addition, it is expected that the company would have a lot of "angry" creditors, seeking to get paid.
The liquidator will carry out a full and independent probe into the firm's affairs, counsel said.
Counsel said that the provisional liquidator could also seek to continue to trade, and hopefully sell the firm's core business.
His client believes the company still profitable and the sale of the business could save the employees' jobs.
Mr Justice Allen, noting that the company was clearly "hopelessly insolvent" said he was satisfied to appoint Mr O'Dwyer as provisional liquidator, and granted him various powers in respect of the firm.
The matter will return before the court next month.
Subscribe or register today to discover more from DonegalLive.ie
Buy the e-paper of the Donegal Democrat, Donegal People's Press, Donegal Post and Inish Times here for instant access to Donegal's premier news titles.
Keep up with the latest news from Donegal with our daily newsletter featuring the most important stories of the day delivered to your inbox every evening at 5pm.