KATHLEEN BARRINGTON on claims of how the loss of the bar licence led to receivershipA FORMER owner of the Ormonde Hotel in Dublin said the hotel had gone into receivership after losing its bar licence because a garda inspector had objected to the hotel hosting events for the gay community.
Desmond Coffey, a director of Ormonde Inns in liquidation, yesterday told the Master's Court the inspector said ``he wasn't going to have anything like that going on on his patch''.
But Mr Coffey denied a suggestion from counsel Grainne Clohessy BL, for the liquidator, that he was using the story as a smoke screen because he had no tax clearance certificate for the bar. Mr Coffey said the fact that Ormonde Inns had gone into receivership meant the hotel had fetched only £2.2m when it was finally sold in September 1997, instead of the £2.8m he expected.
Ms Clohessy told the court that Ormonde Inns had gone into liquidation owing the Revenue Commissioners £450,000 in 1997. She said that another of Mr Coffey's companies, Fawnside, which had previously operated the Ormonde Hotel, went into liquidation owing the Revenue more than £300,000.
Mr Coffey admitted that Fawnside had never traded at a profit from October 1991 to August 1995. However, he claimed if he had got £2.8m for the hotel in 1997, then Ormonde Inns could have paid off its debts. Mr Coffey agreed that Ormonde Inns had taken on all the debts of Fawnside, except the Revenue debts. He said this had been done at the suggestion of his advisers, chartered accountants Simpson Xavier, and his bankers, Hill Samuel.
Asked by the Master of the High Court, Harry Hill SC, if he did not think such a course of action was fraudulent, Mr Coffey said he didn't think so, he thought it was the only way.
Mr Coffey added that Fawnside's Revenue debt could not be brought forward into Ormonde Inns because Hill Samuel Bank would not lend to a company with that level of debt. The court also heard that Mr Coffey had intermingled funds from a number of other companies in which he was a shareholder and director. Asked by counsel if that was a case of ``robbing Peter to pay Paul,'' Mr Coffey said one company would pay for another company if it needed it. Mr Coffey agreed that between 1994 and 1997, he had received letters from Ulster Bank, AIB and Anglo Irish Bank warning him that the way he was operating his bank accounts was unacceptable.
Ms Clohessy was appearing for chartered accountant Billy O'Riordan of Coopers & Lybrand, who was appointed as liquidator to both Fawnside and Ormonde Inns on the nomination of the Revenue Commissioners.