Residence slashed membership prices by nearly 50 pc late last year in a bid to create a quick cash flow.
The St Stephen's Green hotspot went into examinership in the High Court yesterday.
The Herald can reveal that while some of its 1,450 members forked out €900 for the privilege of entering the four-storey club, a special membership deal of €500 was offered in the past two months of the year.
It is understood that dozens of people clamoured to renew their membership and sign up for the first time with the offer -- providing they forked out the cash up front and paid in full for the whole year.
An insider said: "They started offering the deal around November-time where people could sign up again for the lower price -- but only if they paid the whole year's subscription fee there and then and in cash.
"If you continued paying by direct debit for 2010 though, you had to pay the higher rate so some people were obviously a bit annoyed about that.
And he reckoned that the reason the club got itself into such dire financial straits was its super-strict door policy, where even some members had a tricky time entering the venue.
It emerged in the High Court that the club's main sources of income were membership subscriptions, food and beverage, but it had failed to make a profit.
Although the club had 1,450 members, it employed 58 staff and had massive overheads as its owners tried to keep the venue open to a select few, reducing membership rates from the initial fee of €1,600.
No expense was spared either when kitting out the club during a €3.4m refurbishment, with one fireplace alone costing some €18,000.
The fact that it was only fully open to a fraction of the capital's population may also have hindered its profit-making ability, the insider added.
"I heard stories about some people who were turned away from the club after letting their membership fee lapse by about two weeks. Then at weekends, you would go in there and see loads of people who weren't members at all but seemed to be there all the time which did not seem fair," he said.
"The club would be packed at the weekends and then the rest of the week, it would be relatively quiet with only a few people having a coffee or lunch and it's hard to see how they would have made a profit. These days, bars just can't afford to be turning paying customers away from the door. What's the point in having a VIP club if it's half empty for a lot of the week?"
Rivals reacted with shock today as Residence revealed financial difficulties.
The hotspot, which regularly plays host to some of Dublin's best known names and faces, is owned by Simon and Christian Stokes and first opened its doors in early 2008
Bosses at Krystle nightclub and Lillie's Bordello, were quick to express their sympathy -- despite Residence representing a major competitor.
Rangan Aruchelvan, the co-owner of Harcourt Street's Krystle sent his best wishes to the Stokes brothers and was confidant they had the dedication and commitment needed to get the business back to its best.
"It's terrible to see any business in trouble," he told the Herald. "They're two young guys and they only started recently so I wish them well in rearranging their financial structures and securing new creditors and investors. It's a difficult time for all those in the top end of the market.
"In the case of Krystle nightclub, it is part of a hotel, The Russell Court. It only survives because we have the hotel.
"We do give membership for the club but we don't charge for it, we are relying solely on the other aspects of the trade.
"We only open on a Friday and Saturday night because there's not enough business the other nights.
"Our other venue, Dicey's Garden is open between Wednesday and Saturday and we find that is what the customers want," he added.
Meanwhile, Dave Morrissey, co-owner of Grafton Street haunt, Lillie's Bordello, said the revelations were not a welcome beginning to 2010.
He said: "It's all negative for the industry in general. I know we're all there competing but we are all in the same game. It is tough out there and we've all felt it.
"You're just watching your business all the time. You're watching every angle and you're trying to be competitive.
"We have seen places go that have completely priced themselves out of the market and as a result we have done quite a lot in reducing price, particularly with the likes of champagne.
"If the money's not coming in the front door, then you have to watch the back door and we are focusing on expenditure all the time," he added.
Lillie's Bordello, Dublin's original celebrity hotspot, had taken the initiative of reducing their membership rates to €500 per annum.
"If you break it down, it actually works out cheaper than paying a cover charge every time you go out," said Dave.
"We haven't had any concerns in terms of selling membership because in general customers find they are getting good value for money.
"We have loyal members who would come to Lillie's once a week and we look after them very well," he added.