Investors eye up Fallon & Byrne
Published 13/01/2012 | 05:00
EIGHTEEN potential investors have expressed an interest in the award-winning food business Fallon & Byrne, which is on the verge of collapse.
The upmarket Dublin food hall and gourmet restaurant became something of an icon during the Celtic Tiger years but is now in financial trouble and weighed down by debts.
Yesterday, Mr Justice Brian McGovern appointed Neil Hughes, of Hughes Blake Chartered Accountants, as examiner to the the company.
Mr Hughes now has up to 100 days to come up with a scheme with the company's creditors. If this is then approved by the High Court, it will allow the firm to continue to trade as a going concern.
The company sought Mr Hughes's appointment on the grounds that it is insolvent and unable to pay a €1.4m tax bill.
But Rossa Fanning, for Mr Hughes, said his client shared the view that the company had a good prospect of survival and said there had already been 18 expressions of interest by prospective investors.
Fallon & Byrne is famed for its organic and artisan produce and its wine shop as well as its award-winning restaurant.
It was set up in 2006 by property developer Paul Byrne and his wife Fiona McHugh, former editor of the 'Sunday Times'.
The court heard that an unnamed relative of one of its directors, Mr Byrne, misappropriated at least €223,000 from the business over a number of years. The woman, who was its financial administrator, also allowed huge debts to the Revenue to build up unknown to its owners, it was claimed.
Between 2006 and 2009, unknown to the directors, substantial arrears of taxes in the region of €840,000 had been allowed to build up despite relevant returns having been made to the Revenue.
The Revenue eventually issued letters of demand and ultimately a petition to wind up the company.
Gary McCarthy, for the company, said the ability of the financial administrator to mask such a significant tax liability from the directors was a fundamental weakness in the systems the directors had put in place.
Mr McCarthy said Fallon & Byrne had called in Delaney, Locke and Thorpe (DLT) accountants to represent it during an audit and discovered a number of inaccuracies and discrepancies in record-keeping.
Its former bookkeeper had suffered a psychological breakdown and was no longer employed at Fallon & Byrne, the court heard.
An instalment plan to pay off its historic tax debts had been agreed with the Revenue but in so doing the company had fallen behind with its current tax payments and the Revenue Commissioners had ultimately lost patience.
However, the High Court heard that an independent accountant's report said the business has a reasonable prospect of survival if certain conditions are met, including securing new investment.
The court appointed the examiner after lawyers for Revenue said that they were taking "a guarded" but "neutral" stance to the company's application.
The company had suffered due to the economic recession since 2008 and turnover had decreased from €11m over the last number of years but had levelled off at just over €9m.
Mr McCarthy said the economic downturn, together with other businesses going into examinership and the receivership in Superquinn, had led to a tightening of credit from suppliers, many of whom would accept only cash on delivery.
As a result of its difficulties with the Revenue Commissioners, the company had been unable to get a tax-clearance certificate, which was necessary to renew its drinks sales licence.
Mr McCarthy said DLT accountants believed that given the protection of the court from its main and other creditors, the company would succeed and that it was currently trading well.