THE Stokes brothers, whose Bang Cafe restaurant went bust two years ago with debts of €2.4m, have been disqualified from acting as directors of any company for the next four years.
The High Court in Dublin again heard how the brothers had used company funds to pay personal bills at plush hotels and restaurants. Simon Stokes said in an affidavit on behalf of himself and his brother Christian that they had been irresponsible -- but denied they were dishonest. If anything their behaviour could be characterised as incompetence, he said.
While the companies they had established were in ruins, the businesses themselves were sold and continue to trade. They now work in another restaurant, Il Segreto on Merrion Row, of which their father Jeff is a director, and earn €2,500 a month, the court was told yesterday. Mr Stokes said the intense publicity surrounding the demise of their business had already acted as a significant punishment. They both have young families and still had liabilities from their business activities from personal guarantees they gave.
After being told they were accepting whatever period the court might impose, Ms Justice Mary Finlay Geoghegan said she was satisfied the appropriate period was six years.
But she reduced the period to just over four years, taking into account mitigating factors. These included the brothers' acceptance that they had been irresponsible in the management of the restaurant operating company, Mayfair Ltd.
The court heard other mitigating factors included the effect the winding up of their businesses had on them personally -- their Residence private members' club on Dublin's Stephen's Green also went into receivership two years ago.
Bernard Dunleavy, counsel for Mayfair liquidator Tom Murray, said there were some areas of conduct by the brothers which warranted a more substantial penalty.
"The funds of the companies were treated as though they were the directors' personal funds," he said. This referred to the personal use by the directors of company credit cards. From January 2007 to June 2009, €127,275 was used on Ulster Bank Business Credit Cards. And from June 2008 to June 2009, €19,851 was used on Bank of Ireland business credit cards.
The court previously heard large sums of Mayfair company money were used to pay personal bills incurred by Simon Stokes at hotels and restaurants, such as the Coral Reef Club in Barbados, Gucci in New York, the Professional Golfers Association and Pia Bang Interiors Dublin, which was owned by their mother Pia Bang.
Payments by Christian Stokes totalled €115,891 including to Ashford Castle, the Maroma Resort & Spa, and the Skovshoved Hotel, Denmark.
Mr Dunleavy said the second area of misconduct was the use of inter-company loans, whereby €721,321 was loaned from a subsidiary called Auldcarn Ltd. This was insolvent by the end of 2005, and the directors should have known this was not collectable, and should have been written it off.
This would have made it obvious sooner that Mayfair was grossly insolvent.
Mr Dunleavy said the liquidator accepted there were mitigating factors.
Unlike most people, they endured a very public fall and the liquidator did not seek to penalise them further in that regard. It appeared that their conduct arose more from "immaturity and a want of care" than from wanton misconduct, Mr Dunleavy said.
Ms Justice Finlay Geoghegan said it was serious, and their conduct made them unfit to be concerned in the management of a company.