Two directors of the Cork-based Kentech group employing 3,000 people worldwide have secured a two month stay on execution of judgments for some US$683,000 against them following disputes about implementation of a settlement agreement to buy another director's shares for US$11 million.
Sarah and John Kent had argued an order for execution would put the company in "immediate peril" on grounds including a risk Danske Bank would call in a US$7 million overdraft facility, plus US$4.5 million of outsanding bonds. A third director, John Gilley, also sought a stay on execution of a US$57,000 judgment entered against him.
John Murphy, Coach Hill, Rochestown, Co Cork, the director who sought execution of the judgments as part of the €11 million settlement of legal proceedings against the other directors, disputed as "scarcely credible" the claims execution of the judgment would put the company in peril, saying it has annual revenues of up to US$140 million.
Josar Holdings Ltd is the holding company in the Kentech group with registered offices at Little Island, Co Cork. It employs up to 3,000 people worldwide but only a small number in Cork, Mr Justice Peter Kelly noted in his ruling on the stay application.
The judge said Mr Murphy’s proceedings were settled in 2012 on terms including those directors who were parties to the settlement were to buy his shares for US$11 million via agreed payments on agreed dates. Some US$3 million had been paid so far under the settlement.
Mr Justice Kelly said, by October 2014, some US$600,000 was outstanding as a result of the failure of Sarah and John Kent to make agreed payments and judgment was entered against them for US$683,000.
They sought a stay on execution and registration arguing valid reasons for the delay in making payments due, including it had not been possible to sell Mr Murphy’s shares on the open market despite their best efforts and their advice was not to try and sell the shares until the company recorded a stronger set of financial results, the judge noted.
The respondents now say the company is in a better position to procure the share sale and they had engaged Investec Bank in that regard and advised Mr Murphy of those steps, he said.
The respondents also said the group’s bankers, Danske Bank, are quitting the Irish market and they were trying to secure alternative banking relationships but that has not been completed. Danske had also reduced the company’s overdraft from US$25 million to US$7 million.
A new non-executive chairman was appointed last June, new board appointmentsd are envisaged and the company is forecasting a normalised EBITDA of US$12m for 2014, the judge said. The hope is Mr Murphy’s shares will be sold in the coming months with a likely discharge of all obligations under the settlement agreement, he noted.
While Mr Murphy had a strong prima facie entitlement to immediately enforce the judgment as the respondents had not met their contractual obligations, the balance of justice favoured a stay, he ruled.
The reasons given for the failure to make payments on time provided a plausible explanation, though not an excuse, he said. On the evidence, substantial progress has now been made with a view to achieving a share sale and discharge of the entire obligations owed to Mr Murphy.
