Directorship restriction imposed on brothers behind Starbucks franchise in Ireland

The judge imposed the restriction after finding Colm and Ciaran Butler failed to prove they acted responsibly in their operation of one of their companies, Downtul Ltd, which leased a premises at St Stephen’s Green, Dublin, that operated as a Starbucks. File Picture: PA

Two brothers behind various Irish franchises, including several Starbucks cafes, TGI Fridays, Mao, and Hardrock Café, have been restricted from acting as company directors for five years.

A High Court judge imposed the restriction after finding Colm and Ciaran Butler failed to prove they acted responsibly in their operation of one of their companies, Downtul Ltd, which leased a premises at St Stephen’s Green, Dublin, that operated as a Starbucks.

In a judgment published on Wednesday, Ms Justice Nessa Cahill noted the brothers are directors of more than 130 companies each.

“It is plain from this fact — and from the vigour with which this application was opposed — that the declarations of restriction sought in the particular circumstances of this case would have significant implications for them, beyond the symbolic or reputational,” she said.

Her orders followed an application from the liquidator of Downtul, Patrick O’Connell. 

Downtul was placed into voluntary liquidation in November 2022.

Mr O’Connell later raised concerns that the brothers did not act honestly and responsibly “with regard to their duties, responsibilities, and actions” as directors of Downtul.

Arising from this, Mr O’Connell sought an order for the brothers to be restricted from acting as company directors or secretaries for five years unless the company meets certain requirements set out in the Companies Act 2014.

The Butlers opposed Mr O’Connell’s application.

A hearing of the case lasted five days, with both sides calling expert witnesses.

Acceding to the liquidator’s request, Ms Justice Cahill said she was not satisfied the brothers acted responsibly in relation to Downtul’s affairs, but they showed they acted honestly.

Ms Justice Cahill said her findings arose primarily from the brothers’ operation of Downtul, and a related company they controlled: Atercin Liffey Unlimited Company.

Downtul’s function was to lease a premises at Stephen Court, St Stephen’s Green, and it did not trade or carry on a business. 

It entered into a lease agreement for the premises in December 2013, its sole transaction.

Atercin operated a Starbucks cafe out of the Stephen’s Green premises. 

The judge noted that Atercin operated from the premises rent-free for two-and-a-half years and obtained government supports to deal with the impacts of the covid-19 pandemic.

In effect, Downtul bore the liability and cost of the lease, while Atercin occupied the leased premises and earned revenue from its trade there.

The judge said Downtul received no contribution from Atercin towards rent due on the Stephen Court premises “and, consequently, was unable to pay its debts as they fell due”.

“In allowing the company to enter and maintain these arrangements, and in failing to ensure an enforceable mechanism by which the company could obtain the funds necessary to discharge its liabilities as they fell due or otherwise protect its position, the respondents [the Butlers] failed to demonstrate responsible conduct with regard to the interests of the company,” the judge said.

• Correction - Colum and Ciaran Butler 
• On 25 June we published an article entitled “Directorship bans on Irish Starbucks franchise brothers” in relation to a High Court judgment in an action brought by a liquidator against Colum and Ciaran Buter. The reference to a “ban” was incorrect and the Judge in fact held that she would impose a restriction order [under the Companies Act 2014] against Colum and Ciaran Buter. We apologise for the error.