The joint liquidators of DK Windows and Doors – which collapsed in 2024 owing hundreds of thousands to customers – have decided that an application should be brought against sole director Darragh Kane seeking disqualification for reckless trading, the High Court was told.
However, Judge Brian Cregan said proceedings for fraudulent trading should also be considered given that by November 2024, following a “Black Friday” promotion, the Dublin firm accepted €40,000 in additional orders.
Joint liquidators, Nicholas O’Dwyer and Colm Dolan of Grant Thornton, said in their latest report to the court on Tuesday that even by August 2024, when it was already clear the company was insolvent, it took in some €400,000 in orders out of a total of €880,000.
Graham Kenny, solicitor for the liquidators, said the clients regarded this as “a sustained course of egregious behaviour” whereby Kane permitted the company to continue trading and incur further liabilities in circumstances where an inability to meet the orders place was evident.
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It demonstrated a serious disregard for the interests of creditors and members of the public, and conduct which falls significantly below the standards expected of a company director, the liquidators said.
It had not been possible to access the company’s cloud based books and records but the liquidators had effectively “reverse engineered” the finances to find out how much had been paid by customers.
Based on the totality of the matters identified in their investigations, the liquidators considered it appropriate to pursue an order against Kane under Section 842 of the Companies Act whereby an individual can be disqualified from acting as an officer or being involved in the management of any company for a certain period.
The liquidators have also sought the consent of Kane to disqualification to save on costs but have yet to receive a response from his representative.
They have also yet to receive feedback from the Corporate Enforcement Authority (CEA) in relation to their final report and will keep the CEA updated regarding the proposed action and any further steps taken.
Asked by the judge about the trading not just being reckless but fraudulent, Kenny said it appeared that fraudulent required a different intent. However, there was the ultimate sanction of fixing the director with personal liability for the company’s debts, he said.
The liquidators were perfectly prepared to bring an application under company law which covers both fraudulent and reckless trading, he said.
Asked if the CEA could bring separate proceedings or take over the liquidators’ proceedings, Kenny said that would be unusual and the cases are ordinarily brought by the liquidators.
The judge said he would adjourn the matter for a month to await the CEA response and the next thing would be whether he should request the CEA to appear before the court to indicate what it intends to do.
He believed this was a case where there was some considerable disquiet. “It is a fairly alarming situation where a company takes in funds during a Black Friday campaign when they are not in a position to fulfil those orders,” he said.
