Property investment firm linked to Eddie Hobbs wound up with debts of €11m
A property investment company whose non-executive directors once included consumer champion Eddie Hobbs has been wound up owing more than €11m to investors.
Brendan Investments Pan European Property plc (Bipep) lost most of its money due to property investments in the city of Detroit, USA, and Dusseldorf, Germany, the High Court heard.
It has assets of just €91,000 and liabilities of €11.4m, €11.3m of which is owed to investors.
The wind-up petition was presented by Stephen Brady BL, on behalf of directors Hugh O'Neill and Vincent Regan, who are also creditors. Mr Hobbs, who became a non-executive director when the company went public in 2007, resigned that position more than two years ago.
The petition, which followed a meeting of directors on July 1 last, stated the firm was incorporated in 2006 and, on going public in 2007, raised €12.6m through a public round of funds in exchange for loan notes and ordinary shares.
The strategy was to invest in a mix of commercial, residential and development property over a 10-year period.
While investments were initially promising, the fall in value of the company was a result of the credit crunch and "two unforeseen events", the petition said.
The first related to a Dusseldorf office property, which Brendan Investments Sarl (a wholly owned subsidiary of Bipep) had invested €15.7m in.
The tenant of that building, Dax-listed Arcandor AG, subsequently became insolvent and Bipep lost a total of €6m on that.
In 2012, the company decided to invest more than €4.5m in distressed residential properties in Detroit through a wholly-owned subsidiary, Artesian Equity LLC.
The value of that investment, the petition said, was "seriously impacted" by a number of factors.
These included "poor management" of the portfolio by the US property manager and high holding cost of the portfolio.
There was also the water crisis in Flint, 110km north of Detroit, in which, due to insufficient water treatment, around 100,000 residents of Flint were potentially exposed to high levels of lead in their drinking water.
It led to a federal state of emergency being declared in 2015 and the resulting crisis reduced demand for properties acquired in Detroit along with increased costs of having to comply with the region's regulations.
As a result of the financial difficulties the company finds itself in, it is not in a position to discharge outstanding sums to its creditors and shareholders.
Mr Justice David Keane was told creditors were notified of the winding up application through public advertisement of the application.
The judge said he was satisfied to appoint Aidan Garcia Diaz, of Collins Garcia Insolvency Practitioners, as official liquidator of Bipep.