Fossett’s Circus faces ‘uphill struggle to survive’

Fossett Brothers Circus, which failed to pay Vat for eight years, was facing an uphill struggle to survive, a judge said yesterday.

Circuit Court President Mr Justice Raymond Groarke said he was not impressed by the “perseverance in lack of candour” by Robert Fossett, one of the two director brothers who ran the company.

He told barrister Stephen Hannaphy, counsel for the examiner who prepared a scheme of arrangement aimed at saving the company, that he would allow a further seven days for preparation of a proper corporate structure for the company.

Judge Groarke said that Robert Fossett in his affidavit, in which he outlined mistakes about Vat payments, was blaming the company auditor which the court did not accept.

He said he could not conclude on the evidence presented to him that it would meet the requirements of the Companies Act legislation for allowing the firm’s survival.

“They hadn’t the cash to pay the Vat because they put the cash into running the business,” Judge Groarke told Arthur Cunningham, counsel for the Revenue Commissioners, who opposed the examiner’s scheme.

The court heard that the company owed the Revenue €333,000 including €181,000 Vat. Prior to the examinership having been put in place, the Circuit Civil Court had been told the Vat debt was just €84,000.

The judge told Mr Hannaphy that the court had to decide whether it should give his clients an opportunity to put a corporate structure in place to see if they could persuade him that he should allow this firm to survive.

“If I saw a proper structure put in place I would certainly look at it and I will give you seven days to do so,” he said.

Referring to the potential for saving 16 jobs, Judge Groarke said: “This company has been in existence for 127 years and is part of all of our childhoods.”

He adjourned the proceedings until February 19, but told counsel: “You have an uphill struggle.”

Mr Hannaphy told the court the proposed scheme included the stepping aside, for between three and five years, of the Fossett brothers, Robert and Edward, to allow for the appointment of a new director to run the company.

Mr Cunningham said the scheme envisaged an investment by the Fossetts of €38,000 which, after the payment of litigation and examinership fees and other expenses, would leave only €6,000 available to the company to pay its debts as they became due.

He said the proposed scheme did not have a reasonable prospect of survival for the company. Next month, its liabilities would be €53,825 and total profits were estimated at €57,000, By April, liabilities would have risen by another €86,400, with an expected gross profit of €86,000, showing a loss of €400. Total overheads over the next few months would amount to €805,000.

Mr Cunningham said the company in March would have €6,000 to meet liabilities which did not give it room to breathe. It had been suggested the company would generate a gross profit of €815,000 in 2015.

In 2010 it had made a loss followed in 2011 by a profit of €9,000. It had made a net profit of €44,000 in 2012 and a nett loss of €5,000 in 2013. The company had a very bad year in 2014, forcing it into examinership.

By October, the net deficit was €1.4m. Eighteen months previously, the net deficit was between €170,000 and €180,000.

“The examiner is asking the court and creditors to put a lot of faith in figures that are not backed,” Mr Cunningham said.

Despite undertakings of standing aside for several years, the directors would still own all of the shares of the company, the court heard.