The Revenue Commissioners plans to bring a court application challenging the legality of a €500,000 loan made to troubled artificial intelligence firm Altada when it was allegedly heavily insolvent.
he High Court heard on Monday that Revenue continues to be concerned about the €500,000 debenture, whose terms stipulated it was to be repaid to the four lenders within eight months along with an additional €500,000 “premium”.
Revenue’s counsel, Arthur Cunningham, said the State agency, owed more than €2m from Altada, will bring an application asking the court to declare the debenture is unlawful.
It will bring the application, as a creditor owed more than €2m from Altada, including €1.6m in preferential debt, with or without the support of the company’s liquidator, whose report highlighted the impugned loan, Mr Cunningham said.
If Revenue is correct in its contention that the €500,000 loan is unlawful, the appointment of a receiver over the Co Cork company in November 2022, on foot of a petition from the four lenders, would also be invalid, the court heard.
Revenue’s “firm view” is that Altada’s assets are owned by the company itself and are under the control of the liquidator, rather than with the receiver, said Mr Cunningham.
Revenue takes issue with the prospect that payment would be made to the four lenders out of Altada’s assets and has concerns about payment of the receiver’s fees, which totalled some €680,000, he said.
The receiver has given a court undertaking not to disperse any funds from a sale of the firm until after January 27, and will discuss with the parties which costs can be disposed of after that date.
The court heard about a number of twists and turns in the efforts to achieve a sale of Altada since last Wednesday’s hearing.
The court was informed last week that liquidator John Healy, of Kirby Healy Chartered Accountants, and receiver Nicholas O’Dwyer, a partner at Grant Thornton, would work together to achieve a sale of the company’s assets by the end of last week.
Two rival bids were discussed before the court.
The receiver accepted a bid from technology entrepreneur Eoin Goulding through his company Cometaze, while the liquidator accepted a higher bid from Datech, which is controlled by a former investor in Altada, US businessman Jeffrey Leo.
Mr Healy was appointed as liquidator of Altada after Datech petitioned the court in December for the firm’s winding up.
David Whelan, representing the liquidator, said Datech’s offer had seemed to be superior and required examination.
The Friday evening deadline imposed by the liquidator for the close of the sale to Datech passed without the contract concluding, he said.
Barrister Declan Murphy, for the receiver, said his client, as agent of the firm, now intends to plough on with a sale to Cometaze.
The latest agreement imposes a new deadline of 10pm on Tuesday for completion of the sale.
Barrister Stephen Byrne said his client, Datech, was still willing to proceed with its proposal with no “price chip” attached.
The offer stood regardless of any alleged threat by Altada’s employees to walk away, he said.
Mr Justice Brian Cregan set out a timeline for the exchange of submissions between the parties who will participate in Revenue’s application for a declaration about the loan’s legitimacy.
There was no other motion before him, and it was not for him to “give a green light or a red light to any party” on the sale of the company, he said.
The judge adjourned the case until Friday for mention.
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