AN American court has ruled that Global Environmental Energy Corp (GEEC), the listed waste-to-resources company that describes Albert Reynolds as its “inactive” chairman, is not entitled to separate itself from its bankrupt Delaware subsidiary.

In the federal court in New York last month Magistrate Steven Gold, who has been hearing continuing cases against GEEC, ruled the Bahamas-based company be subject to these legal proceedings.

Chris McCormack, GEEC’s president and chief executive, had claimed the assets and liabilities of the Delaware company — which has filed for bankruptcy protection with declared debts of almost $20m (€16.3m) — were entirely separate from that of its Bahamas-registered parent.

Gold has ruled they should be considered one and the same.

In 2004, the company changed incorporation from Delaware to the Bahamas but it continues to be embroiled in several legal actions in American courts involving consultants, suppliers, share transfer agents as well as disgruntled shareholders.

The latest ruling means GEEC remains under the jurisdiction of Gold’s court.

A court order obtained recently by this group in New York mandated the appointment of a receiver, a freeze on share trades and their liquidation, with any proceeds to be deposited with the court for distribution to creditors.

It is unclear what those proceeds are likely to be. The latest accounts record a decline in cash assets from $103 in the previous quarter to nil as of February 28, 2005.

The company had a working capital deficit of $3.9m compared with a liability of $1.8m for the quarter ending February 28, 2004. It declared total assets of $35.7m but liabilities of $38m, and warned it may not be able to continue operating as a going concern.

In spite of these setbacks, the company continues to trade as a listed entity and its shares soared last week after bullish comments on several websites trumpeted the gains investors could expect from several expected upcoming deals.

Since its incarnation as a public company in 2000, it has announced several billion dollars worth of prospective sales of its “biosphere” machines but has yet to realise revenues from them.

Last week GEEC announced that Sahara Petroleum Exploration Corp, a subsidiary which it claims may be on the cusp of major oil and gas discoveries in Libya and sub-Saharan Africa, had secured a letter of credit from Diamond Ridge Advisors, a major shareholder, worth almost $1 billion to fund this exploration.

In a recent American court filing, McCormack said that last year Ulster Bank in Dublin had returned a $51m cheque he had attempted to deposit against a $2 billion line of credit from Diamond Ridge Advisors.

Reynolds refused to comment and McCormack did not return calls.