Barrister Rossa Fanning gave Ms Justice Marie Baker in the High Court an undertaking that any pre-paid bookings at the Dublin Citi Hotel and Trinity Bar and night club in Dame St will be honoured and business continue as usual.
Mr Fanning, who appeared with Galway solicitors McSweeney & Co for the landlord, said that, while the court’s refusal to confirm the appointment of an examiner to JJ Red Holdings Limited means automatic liquidation of the hotel company, the landlord Henciti Ltd plan to take over and run the hotel.
Counsel said the jobs of the 50 employees would be protected, apart from those of the two directors and a child of one of them. A plan to extend the hotel by 15 rooms into an adjoining building would be progressed by the landlord.
Judge Baker said the landlords, Paul and Denis Hennebry, opposed the examinership because it was “designed to frustrate and evade” a €1m rent debt settlement between Henciti and JJ Red Holdings owned by hotelier brothers Emmet and Donie McDermott.
She said it is not disputed that the company is insolvent. The hotel company obtained an ex parte injunction restraining the landlord from taking possession on foot of a forfeiture notice and the landlord brought Commercial Court proceedings which settled in July last under a written agreement which had been made an order of court.
The settlement, which resulted in crystallising a €1m debt, included a provision that the landlord could immediately obtain an order for possession and a declaration that the lease was validly forfeited in the event of any payment default shortly afterwards.
Judge Baker said it is clear the hotel company could not meet its obligations under the settlement without a loan or cash injection, as well as an achievable arrangement to reschedule discharging the settlement.
Neil Hughes, of Baker Tilly Hughes Blake, believed a proposed examinership condition requiring funding of €1.7m could not be met and was far outside the capacity of the company.
Judge Baker said Mr Fanning had argued that the sole purpose for the appointment of an examiner was to protect the hotel company from being required to perform obligations freely “and irresponsibly” entered into.
If this was so then the motive for examinership could be seen as one by which the company sought to avoid those settlement obligations and was less focussed on the protection of the business.
“If the appointment of an examiner is to set at naught a court order or compromise of court proceedings… there is a real risk that the process would… fail to further the administration of justice and amount to a collateral attack on previous judgments,” Judge Baker said.
She found, in a reserved judgment, that funds to pay the first tranche of arrears were never in place and there was no facility from a bank or anyone else, as had been untruthfully claimed.
The judge granted the landlord judgment for €1m against JJ Red Holdings Ltd and a declaration that the lease of the hotel had been forfeited. The court was told the landlord would enter into a licencing agreement with the liquidator and negotiate payment for assets of the hotel.