The High Court refused an application by three companies connected with Muckross Park Hotel to continue the interim examiner’s appointment. The hotel had entered examinership under a court order on 15 March 2013. The court held that the companies could not establish a legal interest in the hotel’s new wing that would bind ACC Bank, which held mortgages over both the older premises and the extension.
The companies were Muckross Park Hotel Limited, Boisdale Holdings Limited and Silvermire Properties Limited. The judge said the new wing was legally owned by William Cullen, a director of the three companies, and was subject to a mortgage in favour of ACC Bank. The court did not decide the precise share of the hotel’s business attributable to the extension: the companies put it at about a third, while the bank said it accounted for about 60 per cent.
ACC Bank opposed continued protection on three grounds. It alleged material non-disclosure about ownership of roughly half the hotel, argued that the companies could not meet the statutory survival test without an interest in that part of the premises, and submitted that receivership could preserve the hotel as a going concern. The judge rejected the allegation that Cullen had been deceitful, but found that reasonable inquiries had not been made and relevant information had not been put before the court.
The companies advanced possible bases for occupying the new wing, including a one-year lease said to run from January 2011, a draft seven-year lease from 2007, and earlier oral arrangements. The judge noted uncertainty about whether the written leases had been executed and did not rule on whether an implied tenancy existed. The decisive issue was whether any such tenancy could bind the bank.
The court considered the loan facility and mortgage terms, which restricted lettings or transfers without the bank’s written consent. It concluded that a lease made in breach of those terms could not bind the mortgagee without that consent, and found no written permission had been given. The judge therefore found no basis for the companies to claim a legal interest in the new wing through an implied tenancy that bound ACC Bank.
The court also said examinership could not be used to restructure Cullen’s personal debt. In exercising its discretion, the judge accepted that the receiver intended to keep the hotel operating as a going concern and considered that receivership could achieve the same ends as examinership. The application to continue the interim examiner’s appointment was refused. The judgment does not state that the hotel itself was ordered closed or sold.