The High Court appointed an examiner to The Belohn Ltd., which operates Foley’s Bar and Restaurant in Dublin, and to its holding company, Merrow Ltd. The court also directed the examiner to report within three weeks on concerns about The Belohn’s cash records and staff payments. It did not resolve those concerns in this application.
In a judgment delivered on 18 April 2013, Ms Justice Finlay Geoghegan found that The Belohn and its business had a reasonable prospect of survival as a going concern, subject to conditions in an independent accountant’s report and a scheme of arrangement providing the Bank of Scotland with payment consistent with the value of its security.
The court heard that The Belohn owed the bank more than €4 million. Its business comprises two bars, a restaurant and a rented apartment. The bank had appointed a receiver in October 2012, but the High Court later declared that appointment invalid because it had not been made under seal as required by the 1981 debenture.
The bank and the Revenue Commissioners opposed examinership. The bank relied in part on analysis by the former receiver, David O’Connor, who questioned about €140,000 in the company’s 2012 accounts and said recorded wages appeared low compared with staff rosters and later trading figures. The bank and Revenue raised concerns that staff might have been paid off the books. Sean Foley denied wrongdoing and said Revenue matters had been managed appropriately.
The judge said the available evidence, including affidavits without cross-examination, did not allow the court to determine the accounting and wage questions fairly at this stage. For the purpose of deciding whether to appoint an examiner, she accepted Foley’s account that cash had been properly recorded and that no improper payments or staff-payment irregularities had occurred. She directed the examiner to establish whether cash received in the nine months to 30 September 2012 was properly accounted for, and whether staff payments and related PAYE and PRSI provision or payments were properly recorded.
The judge said the examiner must report if the inquiries did not disclose a satisfactory state of affairs. The examiner also remained obliged to tell the court immediately if he could not formulate a scheme with a reasonable prospect of acceptance and approval. He was not to issue a statutory certificate without the court’s leave.
The court separately held that it had jurisdiction to appoint an examiner to Merrow as a related holding company, despite a receiver having been appointed to Merrow. It found a reasonable prospect of Merrow’s survival depended on The Belohn’s prospects and that examining both companies could help develop a scheme. The court then appointed the same examiner to Merrow.