Thursday 8 December 2016

Brendan Murtagh: Running on empty

The seemingly invincible businessman is out of luck as creditors pursue him for €28m

Published 17/04/2010 | 05:00

No leading Irish has survived as many scrapes as Kingspan director Brendan Murtagh. However, with creditors now pursuing him for €28m it seems as if even the apparently invincible Murtagh has finally run out of luck.

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This week Brendan Murtagh failed to persuade the High Court to allow him to retain ownership of shares and a pension fund with an estimated value of €1.2m.

Murtagh claimed that he needed the assets for "living expenses".

High Court Judge Peter Kelly was having none of it, observing that Murtagh would have to "come to terms" with the fact that he was no longer very wealthy, would have to reduce his standard of living and would have to consider whether he actually needed two houses.

The High Court case laid bare the parlous state of Brendan Murtagh's personal finances. Murtagh told the High Court that his liabilities exceeded his assets by €353m. Last month his remaining 4.62 million Kingspan shares were sold for €24m on the orders of Anglo Irish Bank.

Murtagh told an earlier High Court hearing that he is now insolvent.

Cork-based property company Howard Holdings, of which Murtagh is a non-executive director and a 40pc shareholder, seems to be at the heart of his financial problems.

Murtagh and Howard Holdings chief executive Greg Coughlan are being sued for €28m by investors who put money into a Howard Holdings property scheme in Poland.

Judgment

Judge Kelly granted a judgment for €28m against both men. This allows the investors to seize assets up to this value to recover the debt.

This is the second High Court judgment to have been granted against Murtagh so far this year. In January, the EBS was granted a judgment for €32m, which also involved Howard Holdings, against him.

As part of the case, Murtagh and Coughlan were ordered by the High Court to submit a list of their assets. While Murtagh complied with the order, Coughlan has so far failed to do so.

On Wednesday Judge Kelly ordered gardai to use force if required to enter Coughlan's luxury home at Kinsale, Co Cork, and arrest him for contempt of court. He told the Gardai that they should "break down" Coughlan's door if necessary in order to arrest him.

While Murtagh has been spared the ignominy of possible arrest, the outcome of this week's legal proceedings were still extremely severe. A receiver was appointed to Murtagh's €1.2m retirement nest egg -- his creditors were able to access this money because it was held in an approved retirement fund, which unlike a conventional trustee-administered pension fund is the personal property of the individual making the contributions.

This means that his sole post-retirement income will be the €11,000 per year state pension, the High Court was told. Other repercussions followed on quickly from the appointment of a receiver to the retirement fund with Kingspan announcing that Brendan Murtagh would step down as a director at next month's AGM.

While the full details have yet to emerge it is now clear that things have gone very badly wrong at Howard Holdings.

Like many Irish property companies, it paid inflated prices for assets with borrowed money during the boom.

Now that the property market has collapsed, Howard Holdings is left with assets that are worth a fraction of what it paid for them but still owes the original amounts that it borrowed to purchase them.

Schemes

Among the property schemes in which Howard Holdings was involved was a massive €1bn project to redevelop Cork's south quays. The company also has extensive assets in the south London suburb of Croydon, it owns the grandly-titled Coventry Airport (in reality little more than a converted military airstrip) as well as various assets in Poland, Italy and Spain.

Coventry Airport closed suddenly in December 2009.

Just for good measure, Brendan Murtagh also purchased 56 stores from British discount supermarket group Kwik Save in July 2007. This was precisely not the time to be buying property-related assets.

Renamed FreshXpress, the chain went bust the following year. Murtagh's losses, if any, on this venture are not known.

This week's developments were merely the latest episodes in Brendan Murtagh's remarkable roller-coaster career.

When in September 1998 stockbroker MMI went bust owing almost €18m following heavy trading in the shares of exploration company Dana Petroleum, it quickly emerged that MMI's largest debtor was none other than Brendan Murtagh who, it was claimed, owed €5m.

That same year he was forced to temporarily stand down as a Kingspan director following the discovery that Nicky Shiers, the wife of his son Alan, had bought 20,000 shares in Hewetson, a UK company for which Kingspan was preparing to bid.

The ensuing investigation also unearthed that Kathryn McFadden, a close friend of Brendan Murtagh's other son Fergal, had purchased 13,000 Hewetson shares.

Happily for Brendan Murtagh the Hewetson controversy soon faded from memory. Two years later he was brought back in from the cold and reappointed to the Kingspan board.

In October 2006 Brendan Murtagh was in the wars once again when he took responsibility for Smart Telecom's €40m debts in order to save it from going bust. Having already invested €30m in the company this brought his total Smart exposure to €70m.

He also paid an estimated €30m acquiring a 90pc stake in Broadband Communications Limited, whose sole assets are 120 kilometres of broadband cable and a further 800 kilometres of ducting.

This means that Murtagh has sunk at least €100m into the telecommunications sector with no sign of a return any time soon.

Brendan Murtagh founded the firm that is now Kingspan with his brother Eugene in 1972. In all family-run businesses the issue of the succession rears its ugly head sooner or later.

While Brendan Murtagh returned to the Kingspan board two years after the Hewetson scandal broke, one lasting result of the affair was to permanently exclude either Alan or Fergal from the succession.

Instead Eugene's son Gene succeeded his father as chief executive in 2005.

It is hard not to suspect that Brendan Murtagh's increasingly reckless behaviour over the past 12 years is at least in part due to his frustration at the exclusion of his side of the family from the Kingspan succession stakes.

Whether coincidentally or not, it was in 1998 that Brendan Murtagh first started selling significant numbers of Kingspan shares, raising an estimated €90m even before last month's enforced sale.

So can Brendan Murtagh extricate himself from the desperate financial situation in which he now finds himself?

Over the years he has demonstrated a remarkable ability to bounce back from reverses that would have destroyed the careers of lesser men. Brendan Murtagh is nothing if not a survivor.

The former Cavan inter-county Gaelic footballer won't give up without a fight.

Still the omens aren't good. While Kingspan has weathered the construction downturn better than most companies in the sector, this week's events have precipitated his departure from the group.

If he is to rebuild his fortune he will have to do so from outside Kingspan.

Has Brendan Murtagh, like the proverbial cat, finally used up all of his nine lives?

Irish Independent

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