Tuesday 26 September 2017

Examinership of well-known Dublin bars to be challenged

By Aodhan O'Faolain and Ray Managh

BANK of Scotland is to challenge the appointment of an examiner to a well known Dublin city centre bar and restaurant.

Last Saturday, at an emergency sitting of the High Court Mr justice Gerard Hogan appointed an interim examiner to Belohn Ltd the company that owns and operates the premises known as Foley's Bar and the O'Reilly Bar at Merrion Row, Dublin 2.

 

The appointment was made after the Judge was presented with an independent accountant's report which said the business had a reason prospect of survival if a scheme of arrangement can be agreed with the firm's creditors.

 

Bank of Scotland, who are owed €4m, are the firm's largest creditors. 

 

Today lawyers for BOS told the court that it intends to oppose the company's application to be given the protection of the court from it's creditors.   

 

The application for examinership was made following last Friday's ruling by Mt Justice Paul Gilligan that BOS's appointment of David O'Connor as receiver/manager of the bar's at Merrion Row, Dublin 2 last October was invalid because the bank failed to comply with a formality.

 

That formality required the bank to make the appointment under its seal in formal writing. That requirement was in the mortgage agreement entered into with the owners and operators of the premises, he said.   The bank had appointed a receiver to sell the business in order to recoup what it is owed.

 

The the sole member of Belohn Ltd is a company, Merrow Ltd. Sean Foley and his wife Sherry Yan are the common directors of both companies. Belohn had extensive loan facilities with BOS and, in October 2012, the balance due on those loans amounted to €4m.

 

Under the terms of a mortgage agreement, Bank of Scotland held a charge over the premises.

 

The mortgage agreement was originally entered into in 1981 by Belohn with the Industrial Credit Company Ltd, which in 2002 changed its name to Bank of Scotland (Ireland), which subsequently became Bank of Scotland.. 

 

In its High Court proceedings, Merrow Ltd objected to the receiver's appointment grounds including the appointment had been made without BOS writing under its seal. Merrow had wanted to place Belohn, which has 27 employees, into examinership, the court heard.

 

Arising out of Judge Gilligan's ruling Mr Justice Hogan on Saturday appointed an interim examiner to Belohn. On Sunday evening Mr Justice Hogan also granted the protection of the court to Merrow Ltd. Lawyers for Merrow made the application after BOS appointed a receiver to that company on Friday afternoon.

 

A company seeking examinership from the courts must move within three days if wants either a receiver or a liquidator appointed to that firm discharged. Both applications were made ex-parte.

 

Today following submissions from both sides Mr Justice Hogan agreed to adjourn the matter to Thursday, when BOS's application to have the interim examiner appointed to Belohn discharged will be heard.

 

All the protections granted by the court to the companies are to remain in place, the Judge also directed.

 

The Judge said that everything related to the company was "caught up in a whirlwind" since last Friday's judgment by his colleague Mr Justice Gilligan. Mr Justice Hogan added that theses events may have lead to "suspicions" and "misunderstandings" between the parties, which he urged should be rectified.

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