Exclusive club is placed into examinership owing millions
Published 06/01/2010 | 05:00
ONE of the most exclusive members' clubs in the country was placed into examinership yesterday, owing millions of euro.
The exclusive Residence is spread over four floors in a period building overlooking St Stephen's Green in Dublin, and opened amid great fanfare in May 2008. It counts property tycoon Johnny Ronan, celebrity chef Kevin Dundon, and a host of actors and models among its clientele.
However, the High Court heard yesterday that it cannot pay its debts.
Before granting the club's owners temporary protection from predatory creditors yesterday, Mr Justice John Edwards questioned how the company could be saved.
"Membership of a club like this is a luxury item and we have just emerged from one of the harshest Budgets in living memory," the judge said.
"It is being suggested that membership and the sale of food and beverages will grow in 2010 and 2011 in a situation where people have less money in their pockets?"
However, after hearing further plans and the assessment of an independent accountant, the judge said the court was satisfied there was enough evidence of a reasonable prospect of the company surviving as a going concern.
He appointed an interim examiner to begin negotiations with creditors, and also with a potential investor -- identified to the court in writing.
In a letter to the club's 1,450 members yesterday afternoon, owners Simon and Christian Stokes vowed that it was business as usual.
"As you will know, the examinership process. . . allows viable companies time, enabling them to restructure their finances in order to continue to operate," they wrote.
The twin brothers opened the entertainment club with bars, accommodation and restaurants after a €3.4m refurbishment of the building funded by bank borrowings. They do not own the building.
The High Court heard yesterday that Residence currently employs 58 people, and its main source of income is membership subscription. It is understood that membership costs around €75 a month. The club has not made a profit.
The High Court also heard that the company owes about €1.2m to the Revenue Commissioners. It loaned €616,000 to related companies including Mayfair Properties Ltd, which trades as Bang Cafe, but these firms were unable to repay the loan and are being liquidated.
"It hasn't come as a surprise that it's in trouble but it is a shame," club member and 'VIP' magazine publisher Michael O'Doherty said last night.
"I think a lot of people who didn't go to Residence would have a feeling that it is a poncey, upper class, temple to the excesses of the Celtic Tiger.
"But it wasn't. It was young and cool, based on SoHo in London and New York, a bar/restaurant with a degree of exclusivity for people who would pay for it but without exorbitant food or drink prices.
"Much of the problem was the timing of the launch -- their model would have aimed to be busy five days a week but they were busy only two."
The judge adjourned the case to the Commercial Court on January 13.