Examiner appointed in bid to save hospital cleaning firm

An examiner has been appointed to a company employing 195 people in Dublin and Galway that provides cleaning services to private hospitals and state bodies after the High Court accepted it has a reasonable prospect of survival if certain conditions are met.

The directors of Neylon Maintenance Services claimed financial mismanagement, including false invoicing, falsification of accounts, falsification of a tax clearance certificate and substantial under declaration of tax liabilities by its financial director, accountant Padraic Faherty, resulted in or exacerbated a decline in profitability from 2009 and led to a Revenue debt of almost €1m.

The petition for examinership arose from the company being insolvent due to the “misbehaviour” of Mr Faherty, a member of the Association of Chartered Certified Accountants, Mr Justice Peter Kelly noted. Mr Faherty had been dismissed following failure to live up to his obligations.

After hearing the company is now trading profitably and its interim examiner, Neil Hughes, is confident of putting together a survival scheme, the judge said he was satisfied to confirm Mr Hughes as examiner.

On a going concern basis, there was a deficiency of assets over liabilities of €816,569 which would increase to some €1.7m on a winding up, he noted.

The firm, with branches in Dublin and Loughrea, Co Galway, is the largest Irish-owned supplier of cleaning and maintenance services to the private hospital sectors and has several state clients, including the Revenue.

Examinership would be beneficial for most creditors, none opposed the petition, the Revenue was neutral, and he was satisfied examinership was appropriate especially from the point of view of the employees, the judge said.

Earlier, Declan Murphy, for the company, said the Revenue liability of almost €1m related to the period 2008-2010 but the company was now trading profitably and taxes were being paid. The “unfortunate events” experienced stemmed from Mr Faherty’s period as the company’s accountant but the directors had shown a willingness to deal with the issues raised.

In the petition, the company said director Sylvester Neylon was shocked in June 2010 when AIB Commercial Services contacted him about a serious problem with false invoices and proposed to withdraw the invoice discounting service provided by the bank.

The company said Mr Neylon raised the matter with Mr Faherty, who initially denied false invoicing had occurred before admitting days later he had raised a number of false invoices but it was an isolated incident In early Sep 2010, AIB Commercial Services told Mr Neylon it felt he did not appreciate the extent of the actions of Mr Faherty relating to false invoices and gave Mr Neylon a copy of the company’s debtors ledger provided to the bank.

Mr Neylon, on review of the ledger, knew it was overstated, the company said. On finding Mr Faherty had “lied” to him, Mr Neylon immediately contacted another firm of accountants and asked them to review the accounts. Another accountant had also said he had not, contrary to representations by Mr Faherty, acted as auditor to the company or prepared any financial statements for it.

Mr Neylon entered Mr Faherty’s office in late Sep 2010 while Mr Faherty was on holiday and discovered documents of which he had been unaware, the company said. These included a forged tax clearance certificate up to June 15, 2011, and a Feb 2010 letter from AIBCS addressed to Mr Faherty and Mr Neylon outlining major problems with the invoice discounting facility, including an overpayment of some €283,000.

Another letter from the company to AIBCS, which accepted the overpayment and assured it would not happen again, contained a forged signature of Mr Neylon, the company said.

Other documents included many from the Revenue outlining various problems with taxes dating back to 2008, the company said.

Mr Faherty was dismissed and an investigation into the company’s accounts found accounts, which Mr Faherty had represented as being prepared by another accountant, contained forged directors’ signatures and were “grossly inaccurate”, in that the company sustained net loss of €407,700 as opposed to net profit of €224,000.


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