Leo Financial Services, a company controlled by businessman Jeffrey Leo, who had been handling a €66 million investment for US investors Mary and James Wenning, bought their multimillion euro shares in Steelworks Investments Limited for €1, a High Court judge noted today.
Mr Justice David Nolan, confirming the appointment of Kieran Wallace and Andrew O’Leary of Interpath Ireland Limited as joint liquidators over Steelworks Investments, said the share transfer looked suspicious and in one fell swoop the Wennings had lost voting rights in Steelworks and its group of companies.
Judge Nolan said objections to Wenning Holdings Limited’s petition for the liquidation had been withdrawn by company creditors, apart from their objecting to the appointment of Mr Wallace.
Dundrum House Hotel, Co Tipperary, which was the registered office of the company had, because of its international protection accommodation for refugees’ status, been referred to as the crown jewel in Steelworks’ assets.
The court had earlier heard from Ms Kelley Smith SC, who appeared with barrister Stephen Walsh for Wenning Holdings, that Steelworks was used as an investment vehicle for the Wenning’s €66 million interest free loans to it for the purposes of making investments in Ireland. In that capacity the company incorporated a number of subsidiaries including what were called the Steelworks group.
Judge Nolan referred to an earlier judgment of his colleague, Judge Barrett, who had expressed a strong sense of scepticism on all of the investment having been surrendered for the sum of €1, and stated he shared that scepticism given that no plausible explanation for the Steelworks transaction had, as yet, been forthcoming from Mr Leo.
Mr Justice Barrett had referred to Mr Wallace’s description of the transaction as having been unlawful and had the effect of perpetrating a fraud on the company and may have been done to enable Mr Leo to obtain full control for his own benefit.
Judge Nolan said Ms Smith had told the court the removal of Mr Wallace, who had allegedly been information gathering for other legal proceedings, and his replacement would add further delay.
He said he was satisfied that Mr Leo was not in a position to challenge the appointment of the liquidators in circumstances where he had misled the court materially in relation to his involvement in a company, Utmasta, which was benefiting from the accommodation status of what was described as the jewel in the crown of the group, Dundrum House Hotel.
Leo had stated in open court and elsewhere that he had no involvement in Utmasta when it had been patently clear that a nominee held shares in it on his behalf.
“He is neither a creditor nor a contributor and therefore I am satisfied that the court does not have to consider his views in relation to the appropriateness of the appointments of the liquidators,” Judge Nolan said. “Even if I were to consider his views, it seems to me that he has very serious questions to answer in relation to what, on the face of it, looks like a fraud perpetrated by him and others against the company and the petitioner.”
Judge Nolan said there was no good reason why both Mr Wallace and Mr O’Leary should not be appointed liquidators and he did not believe there was any evidence Mr Wallace had been seeking an inappropriate litigious advantage in any future legal proceedings. The liquidators were officers of the court and would report to the court in relation to their findings.