Sheils restricted from holding company directorships

A FOUNDER of the now defunct Kilkenny Voice newspaper has been restricted from holding directorships of companies for five years unless certain capital requirements are met.

A FOUNDER of the now defunct Kilkenny Voice newspaper has been restricted from holding directorships of companies for five years unless certain capital requirements are met.

Mr Justice Daniel O’Keeffe made the order at the High Court on Friday under section 150 of the Companies Act against John Sheils, who set up Voice Provincial Newspapers in 2006, after finding he had not acted in a responsible manner in his role as a director of the firm.

The company with a registered address in Co Kilkenny had employed 31 people and published 10 regional titles. It ceased publication in December 2008 and went into liquidation in February 2009 as a result of a slump in advertising revenues.

The company’s liquidator, Kieran Wallace of KPMG, sought the section 150 order against Mr Sheils. While it was not being suggested Mr Sheils had acted dishonestly, it was claimed he had not acted in a responsible manner in his role as a director.

Lawyers for Mr Sheils opposed the application on a number of grounds including that he was effectively “sidelined” after a company controlled by developer businessman Niall Mellon invested E4 million in the group and placed a management team in charge of the company.

Counsel for Mr Wallace said the order was sought on grounds including the company’s failure to keep statutory books, accounts and records; failure to take minutes of any board meetings; failure to prepare annual accounts; and failure to appoint a second director to the company for a period of more than 12 months.

The court was also told there was a failure by the company to file a return and the Revenue Commissioners was owed more than €300,000 when the firm when into liquidation.

There was insufficient material to allow the liquidator estimate when the company became insolvent, the court also heard.

In his defence it was argued Mr Sheils had nothing to do “with the day to day running” of the company and was effectively “sidelined” after Niall Mellon’s Citi Gate Glasgow Ltd invested E4 million in the company in and about early 2008.

Mr Sheils claimed he became a non-executive director of the firm after that investment was made. It was claimed while Mr Mellon did not become a director, a number of people on his behalf took over the management of the company.

In his ruling, Mr Justice Daniel O’Keeffe said, while it was not being suggested that Mr Sheils had acted dishonestly, the court was satisfied to impose the restrictions on Mr Sheils because books and records were not kept.

Irrespective of Mr Mellon’s direct or indirect investment, Mr Sheils was obliged to comply with provisions of the Companies Act in relation to matters including keeping of statutory books and accounts that would allow parties establish how the company was performing or if it was insolvent or not.

There was no evidence before him that the company had complied with those sections of the Companies Acts that required it to keep proper books, records and accounts, the judge said.

Local businesses and individuals were owed 1.8 million euro by Kilkenny Newspapers Limited, the company that owned the Kilkenny Voice newspaper when it went into liquidation in 2009.