The Minister for Justice wants three retail investors to bear the costs of a proposed investigation into the affairs of a company in the Solar 21 renewable energy group.
The investors are owed some £330,000 (€380,000) from EFW 21 Renewable Energy Ltd, for which they are asking the High Court to appoint an independent inspector under section 747 of the 2014 Companies Act.
If the court accedes to their request, it would be the second time a creditor has secured the appointment of an inspector to a company under section 747.
The costs incurred by an inspector carrying out his or her functions are borne, in the first instance, by the Department of Justice. There is a possibility for the Minister to recoup the costs from a firm under inspectorship, if there are funds to draw from, in certain circumstances.
Restructuring schemes
EFW 21 was one of two Solar 21 firms for which the High Court sanctioned restructuring schemes earlier this month. The companies told the court investors should receive 72 per cent of what they are owed, payable after four years, subject to commercial risk.
Solar 21 had raised some £209 million (€240 million) from Irish investors to build a waste-energy plant in Yorkshire, England, that was abandoned due to being no longer viable following delays.
EFW 21 and EFW 21 Renewable Energy (Ireland) Ltd provided loans to several other companies in the group for projects that went on to experience significant delays. The holdup in disposing of these projects, along with cash flow issues, prevented the repayment of the intercompany loans and investments, the firms claimed.
On Wednesday, Stephen Brady BL, representing the investors seeking the inspector’s appointment, told the court he received an “unhelpful” letter from the Minister that morning indicating she intends to seek security for the inspectorship costs.
This is the first time he has been alerted about this intention, despite the Minister being served with his legal papers last July.
Reading from the letter, he said the Minister wrote that she is “unlikely to recover the costs of the investigation from the company” and it is “not clear” to her why the applicants should be entitled to the benefit of the inspectorship at the expense of the taxpayer.
Mr Brady said it is “wholly unsatisfactory” that the Minister would apply for this on the basis of an “assumption” without any basis and so close to the hearing of his application, which is scheduled for two weeks’ time.
'Neutral stance'
His clients are small retail investors who say an inspectorship is appropriate, and there is no suggestion that the Corporate Enforcement Authority (CEA) is about to start its own investigation into the company, Mr Brady said.
Noel McGrath BL, for the Minister, said there was “no intention” of the Minister to ask the court to preempt anything.
Christopher Mills BL, for the CEA, said his client is taking a “neutral stance” on the application for an inspector.
The EFW 21 company, through its counsel Declan Murphy BL, said it wanted Mr Brady’s application to be heard as soon as possible. The costs of the proposed exercise, he said, are “daunting and huge”.
The matter has been adjourned.
