The High Court appointed an examiner to Rathmond Ireland Ltd, which operates the Aussie BBQ restaurants, despite finding serious wrongdoing involving unpaid taxes and the company’s dealings with Revenue. The court sent the case to the Dublin Circuit Court for further hearings and directed that its concerns about the directors be brought to the attention of the judge handling the case and the examiner.
Rathmond sought court protection under the Companies Act 2014 and the appointment of an examiner. The petition was presented on 7 April 2017. The court declined to appoint an interim examiner that day and heard the petition on 3 May. Revenue opposed the application; two creditors supported it, and no other creditors appeared.
Justice Costello found the company unable to pay its debts as they fell due. The independent expert’s report said it had a reasonable prospect of survival subject to conditions. The company’s South Richmond Street restaurant was profitable, while its Tallaght restaurant had incurred losses and closed after the company agreed to surrender its lease on 14 April 2017. At the petition date, the company had 32 employees; 20 worked at the South Richmond Street premises.
Revenue argued that the company had used taxes collected from employees and VAT to fund its operations, concealed the full extent of its conduct from the court and independent expert, and presented the petition primarily to avoid tax. The company accepted the facts about its failure to pay tax but disputed that it had brought the petition for an improper purpose, saying it sought to preserve jobs.
The judge found that the company had used unpaid tax liabilities to support day-to-day operations and had not disclosed that it under-reported its tax liability in 2016 negotiations for an instalment arrangement. The arrangement enabled it to obtain a tax clearance certificate and renew its liquor licence. The court said the conduct and concealment were serious, but did not find the concealment alone sufficient to dismiss the petition. It also rejected Revenue’s claim that the petition was presented solely or primarily to avoid tax.
With considerable hesitation, the judge concluded that the petition should not be refused. She said appointing an examiner could serve the purpose of preserving the enterprise and jobs while ensuring the wrongdoing was not condoned and the directors did not profit or escape accountability. The order appoints Dessie Morrow as examiner, remits further hearings to the Dublin Circuit Court, and directs that the petition papers and judgment be sent to the Director of Corporate Enforcement. The judge recommended that the Circuit Court consider whether Barry Sheehan should continue to be involved in management or act as a director; she did not decide that question.