The High Court has appointed provisional liquidators to a company operating the Brook Lodge Hotel in Aughrim, Co Wicklow, after being told it was insolvent and unable to pay a €1.2 million debt to a creditor.
Mr Justice Roderick Murphy was also told three directors of the hotel operating company, Durgman Entertainment Ltd, had carried out a threat to transfer the assets of the premises to a new company allegedly set up in an attempt to avoid a court order requiring them to pay the debt.
Eamonn Galavan, Clonroche, Enniscorthy, Co Wexford, is to bring contempt proceedings in the Commercial Court on Monday against three Durgman directors: Bernard Doyle, Waterside, Darglevale, Bray; Evan Doyle, Macreddin Village, Aughrim, and Eoin Doyle, Levmoss Hall, The Gallops, Leopardstown, Dublin.
The contempt application arises from their alleged failure to abide by an order of March 3rd 2010 requiring Durgman and two related companies to purchase €1.2m worth of shares from a company owned by Mr Galavan.
An appeal was lodged against that order on March 16th, 2010, but no steps have since been taken to prosecute that appeal, Mr Galavan said in an affidavit.
The petition to appoint Neil Hughes and Kieran McCarthy, of Hughes Blake Accountants, provisional liquidators was made today on an ex-parte basis by Gary McCarthy SC, for Mr Galavan.
Mr McCarthy said discussions took place between Mr Galavan and the directors of Durgman in which it was agreed the company would pay Mr Galavan €100,000 over five years on condition certain information would also be provided to Mr Galavan in relation to transfers to related parties of the company.
During those negotiations, the directors of Durgman threatened, unless Mr Galavan accepted this deal, they would immediately liquidate Durgman and use a new company, Hollbell Ltd, to operate the hotel and associated activities, counsel said.
The deal never happened and on June 29th last, Mr Galavan was shocked to learn the threat to set up a new company had been carried out, counsel said. The hotel continues to trade.
Given the “cavalier way” the directors had conducted themselves by seeking to transfer the assets of the company at no value to another company, counsel said he was seeking the appointment of provisional liquidators.
The Brook Lodge is a popular hotel, particularly for weddings, but despite having a gross profit of €2.8 million last year, it has liabilities over assets of €4 million, counsel said.
There was also concern about share-in-profit payments to its partners of €353,311 in 2010 and €629,130 in 2009 despite the financial situation of the company, counsel said. Another €450,000 was paid to directors or related parties for rent and profit shares in 2009 and €426,000 was paid in 2010.
Mr Justice Murphy agreed to grant the liquidators’ power to appoint a solicitor, hire and fire employees, take possession of the company’s assets and open bank accounts.
The matter will come back before the court later this month.
