Supermac's owner acquires Claddagh chain for $10m

John Mulligan Twitter Email

March 29 2008 04:48 AM

Supermac's owner Pat McDonagh has succeeded in acquiring the US-based Claddagh Irish Pub restaurant chain for more than $10m (€6.3m), despite objections from a number of creditors owed money from the business which was in bankruptcy protection since 2006.

Mr McDonagh had bankrolled the expansion of the chain, which operates from 16 premises in states such as Indiana, Ohio, Kentucky and Illinois.

The Galway businessman made an application to buy the Claddagh chain out of bankruptcy a number of months ago, and the offer has just been approved by a US court. It's expected to be finalised within the next couple of weeks.

The purchase price placed an enterprise value of $31m on the business. Mr McDonagh remains an unsecured creditor, owed about $21m, but admitted he is unlikely to see any of the money returned.

Claddagh was established in 2001 by a US national, Kevin Blair, who was at one time an employee of Supermac's.

Mr McDonagh financed the business, loaning it over $21m. Following a rapid expansion, Mr Blair was desperately seeking additional finance from Mr McDonagh by late 2004. But he refused to lend any more money.

Stand-off

The stand-off led to a highly publicised courtroom battle, where Mr Blair insisted that the money received from Mr McDonagh had been by way of loans, and not an investment. Mr McDonagh, who made his investment through Supermac's, has written off most of his outlay.

A court ruled against Mr Blair and in favour of Mr McDonagh, awarding him $2.5m in compensation and punitive damages. In court, it was alleged that Mr Blair had used company money to fund a lifestyle that was beyond his $65,000 annual salary. Mr Blair is still appealing that ruling.

A number of creditors objected to the sale of Claddagh to Mr McDonagh, including JP Morgan, which has an outstanding $560,000 lien over a promissory note issued by Claddagh.

However, most of the objections centred on lease arrangements, and will be ironed out before the sale goes through in a fortnight.

Mr McDonagh said that the chain's offering will be altered within the next few months, with more of a focus on the bar element of the business rather than on food.