A HIGH Court judge and the Revenue Commissioners have expressed serious concerns about the management of the insolvent Residence private members’ club at St Stephen’s Green in Dublin, whose directors are well-known restaurant owners Simon and Christian Stokes.
The club, a haunt of celebrities and Dublin socialites which opened in May 2008 and is now seeking a continuation of court protection, was effectively subsidised by the “hard-pressed Irish taxpayer” through employees’ tax deductions which were not passed on to the Revenue. It is now owed €1.2 million, Mr Justice Peter Kelly said.
It was “a form of thieving” to use employees’ money deducted for PAYE and PRSI contributions to subsidise a business, he remarked. The laws on examinership were not intended to provide “a form of absolution for recalcitrant directors”.
After being told by chartered accountant Paul Wyse that many companies are “regrettably” doing the same thing, the judge said the accountancy description of such tax money as “working capital” appeared “extraordinary” and gave “a form of respectability to money being improperly used” by a company. Mr Wyse agreed.
Earlier, while accepting the directors of Missford Ltd, the holding company for Residence, bore ultimate responsibility for the conduct of its business, counsel Lyndon MacCann said they were unaware until a Revenue tax audit last year that employees’ tax deductions were not passed on to the Revenue.
Saying the case raised “very serious” issues, Mr Justice Kelly reserved to next Wednesday his decision on whether to continue court protection for Missford, which employs 58 people. The Residence club has 1,450 members and its initial fees were some €1,600 a year, plus a €250 joining fee. Pending the court’s decision, interim examiner Jim Stafford continues in place and the judge has also made orders for payment of wages.
The application for protection was supported by all creditors, including Zurich Bank, owed more than €2.3 million, while the Revenue said it was “very guardedly neutral”. Rossa Fanning, for the bank, said Missford’s directors had provided personal guarantees over loans and the bank also had charges over insurance policies.
Alison Keirse, for the Revenue, said it had “the gravest of concerns” about the ability of the current management of Missford and had heard nothing in court to give it any comfort. There must be a change of management, she said.
