Liquidator case against Edenmore Meats over €2.7m debts is resolved

A High Court action brought by the liquidator of a Donegal meat processing company seeking to make the firm's directors personally liable for debts of €2.7m has been settled.

The settlement, the terms of which are confidential, came about following out of court discussions.

The firm's creditors included over 100 farmers and businesses in the North West.

John Healy, the official liquidator of Edenmore Meats Limited had sought the orders against the firm's directors businessmen Donal Gallagher and Richard Burke, as well as Robert Daly who resigned as a director in 2017, but remained as the firm's company secretary.

Represented by John Kennedy SC, with Brian Walker Bl instructed by solicitor Daniel Hughes, the liquidator claimed that all three should be disqualified from acting as a company director or officer for a period of at least five years.

It was also argued that they should all be made personally liable for the company's debts and liabilities of approximately €2.7m of which €1.5m is owed to farmers who were never paid for the animals they supplied to the business.

The applications were opposed by the directors who strongly deny all allegations of wrongdoing against them.

The case commenced before Mr Justice Oisin Quinn in January who heard evidence in the dispute over four weeks of sittings before the court since then.

This week Mr Justice Quinn was told by Mr Kennedy that the matter had been "brought to a conclusion" on "confidential terms", and with the consent of all the parties could be struck out.

The judge welcomed the resolution of what he said was "a challenging case for everybody involved."

In his action, the liquidator claimed the respondents ran Edenmore Meats, described as a substantial meat processing facility in Lifford in Co Donegal, in a reckless manner and allowed it to continue trading when it was clearly insolvent.

It was claimed that the three directors came on board in 2014/15 after a company linked to the UK-based Mr Gallagher invested €1.4m in Edenmore.

The collapse of Edenmore left many farmers in hardship, it was also claimed.

Following Mr Healy's appointment by the High Court in 2020 after the firm was struck off, his client got little or no co-operation from the directors.

When books and records were eventually made available, it was claimed that email correspondence between the directors showed that they knew that the company continued to trade when it was insolvent.

Represented by Gary McCarthy SC, with Hugh McDowell Bl the directors claimed the company was already in trouble when they came on board.

They claim they acted honourably, responsibly and honestly at all times and it was a source of deep regret that they were unable to turn things around.

They hoped to rescue Edenmore, but claimed that ended in October 2016 when the businesses' Lifford facility was unlawfully occupied.

Ultimately Mr Gallagher claims his investment in the firm was "an unmitigated disaster" for him personally and he remains the firm's biggest creditor.

Mr Gallagher, a successful and experienced businessman had reluctantly invested the money through a company of his due to his connections with Donegal and the company whose former majority shareholder was his cousin Liam McGavigan.

Had Mr Gallagher's company not invested in the company in 2014 the losses incurred would have been greater than those incurred in 2016, it is also claimed.

The directors claimed they took nothing out of the firm and put measures in place to resolve the companies difficulties and restore confidence with the farming community.

The firm had advanced proposals to repay farmers when in October the facility it leased was taken over and occupied by Mr McGavigan, whose relationship with Mr Gallagher had deteriorated, and persons allegedly linked to the paramilitary organisation the INLA.

The building was subsequently placed into receivership and sold.

Mr McGavigan, who was at the time of the alleged occupation was the landlord of the premises, strongly denied all claims of wrongdoing made against him.

Following the occupation the directors claimed they were unable to access the facility, obtain any company records, file reports to the CRO, and the company ceased trading.

They claimed that following the cessation of trading the directors, and members of the their families were the subjects of protests, demands for payment, and were threatened and intimidated by individuals.