Company law problem question!Help!

mba23

I'm trying to work on some company law exam papers and I came across this problem question and I'm not sure if the issues regard the single economic entity or anything else that I can't think of at the moment.
Let me know what you think.Really stuck on this

Here's the question

"Dublin Licensed Premises Ltd (hereinafter referred to as DLP Ltd) is a holding
company owned by James, Olga and Conor. They are also the directors. DLP Ltd owns eight other subsidiary companies that are involved in the running of public houses and night clubs.

Their auditor informs them that €3.5million is owed by the subsidiaries to the
Revenue Commissioners.Conor proposes to sell a number of properties owned by three of the subsidiaries in order to discharge a portion of the debt of all eight subsidiaries. James and Olga agree to this idea and it is proceeded with. No consideration is ever received by these three companies for any of the payment made in respect of the debts owed by the other five.

The three companies subsequently go into liquidation and the appointed liquidator Brian notices that these payments seem inconsistent having regard to the relevant objects clauses, which in each case is silent on the issue of discharging debts of associated companies. The actual payments made went far beyond what was owed individually by each of these companies to the Revenue Commissioners.

Brian seeks your advice as to whether he may be able to recover the proceeds paid out by the three companies in so far as the money raised by the sale of the properties was applied to discharge the debts of the other five companies. Advise Brian on all of the relevant issues supporting your answer with reference to relevant legislation and case"

dewdrop

I am well retired with no qualifications whatsoever so my comments may be well off the mark. I doubt if the Objects clause has any relevance as subsididaries usually loan money to each other. Is there any problem in this particular instance of the companies which have the property proceeds lending it to the companies that owe the Revenue....perhaps too simple!!!!!

valleyoftheunos

Someone didn't go to all their lectures!:D There is a well known case with almost the exact same facts, once you find it you'll be set.

mba23

valleyoftheunos wrote: »

Someone didn't go to all their lectures!:D There is a well known case with almost the exact same facts, once you find it you'll be set.

That's true:)). I know the case is Re Frederick Inns i think but the case came into separate economic entity as well and confused me more when i saw the question. Hopefully a question liked this won't come up.

Marcusm

dewdrop wrote: »

I am well retired with no qualifications whatsoever so my comments may be well off the mark. I doubt if the Objects clause has any relevance as subsididaries usually loan money to each other. Is there any problem in this particular instance of the companies which have the property proceeds lending it to the companies that owe the Revenue....perhaps too simple!!!!!

Two words, ultra vires.