High Court confirms examiner for iconic food business Fallon & Byrne

THE High Court has confirmed the appointment of an examiner to award-winning iconic food business Fallon & Byrne.

Yesterday, Mr Justice Brian McGovern said he was satisfied to appoint Mr Neil Hughes, of Hughes Blake, chartered accountants, as examiner to the company which runs a restaurant and gourmet food hall on Dublin’s Exchequer Street.

Mr Hughes has up to 100 days to come up with a scheme of arrangement with the company’s creditors which, if approved by the High Court, will allow the firm to continue to trade as a going concern.

The company sought Mr Hughes’ appointment on the grounds it is insolvent and unable to pay a €1.4m tax bill. However, the High Court heard an independent accountant’s report has said the business has a reasonable prospect of survival if certain conditions prevail.

The court made the appointment after lawyers for Revenue said they were taking “a guarded” but “neutral” stance to the examinership application.

Yesterday Rossa Fanning for Mr Hughes said his client shared the view that the company has a good prospect of survival. Counsel also told the court that there have been 18 expressions of interest by prospective investors in the company. No bookings had been cancelled and six further bookings for significant events had been made since the company sought Mr Hughes’s appointment.

Gary McCarthy SC for the company said that the firm’s creditors who were supporting the application were either supportive of or were neutral towards the application for examinership.

Counsel said that, in the event the company was liquidated, there would be a deficit of more than €2m and the creditors, including Revenue, would get very little. However, if the company was to continue as a going concern, that deficit would be reduced to €390,000.

Previously the court heard that its problems arose mainly from a decision of the directors Paul Byrne and Fiona McHugh to concentrate on front-of-house duties while leaving financial administration to an under-qualified bookkeeper member of Mr Byrne’s family. Between 2006 and 2009, and unbeknownst to the directors, substantial arrears of taxes in the region of €840,000 had been allowed to build up despite relevant returns having been made to the Revenue Commissioners, which eventually issued letters of demand and ultimately a petition to wind up the company.

Mr McCarthy said the ability of the financial administrator to mask such a significant tax liability from the directors was a fundamental weakness in the systems the directors had put in place when the company was set up in 2006. He said Fallon & Byrne had called in Delaney, Locke and Thorpe (DLT) accountants to represent it during an audit and discovered a number of inaccuracies and discrepancies in record-keeping. It had found that the financial administrator had misappropriated company funds of at least €223,000 over a number of years.

The court heard that the unnamed family member responsible had suffered a psychological breakdown and ceased to be employed. She was not in a position to compensate the company.

An instalment plan to pay off its historic tax debts had been agreed with the Revenue, but in so doing the company had fallen behind with its current tax payments and the Revenue had ultimately lost patience.

The company had suffered due to the economic recession since 2008 and turnover had decreased from €11m, but had levelled off at just over €9m.

Mr McCarthy said DLT accountants believed that, given the protection of the court from its main and other creditors, the company will succeed and is currently trading well.