Popular Cork gym was expected to trade ‘into the future’

The directors of a popular Cork city gym which ceased trading suddenly last week, leaving members out of pocket, had “a reasonable expectation” that it would continue to trade “for the foreseeable future”, according to accounts signed off in February.

Popular Cork gym was expected to trade ‘into the future’

However Lisa Comiskey and Julie Lacey, respectively the director and company secretary of Source Health and Fitness Ltd, Tivoli, Cork, added a number of caveats.

They included a weakened trading environment, with the company incurring losses in recent years, “due to cutbacks in discretionary spending by consumers”.

Moreover, the company was operating from a rented property over which a receiver had been appointed in November 2013 and had been in negotiations with the receiver in relation to the rent payable. The property was on the market.

The directors said the outcome of the negotiations would have “a significant impact on the future of the company and its ability to meet its obligations as they fall due”.

The directors also expressed a willingness to sell the trade of the company as a going concern in conjunction with the property sale.

However as the outcome of this proposed sale and the rent negotiations were at that point unknown, they said “this casts significant doubts upon the ability of the company to continue as a going concern”.

Ms Comiskey, with an address in Enniscorthy, Co Wexford, and Ms Lacey, with an address in Gorey, Co Wexford, said that these circumstances “represent a material uncertainty that casts a significant doubt upon the company’s ability to continue as a going concern”.

Nevertheless, “after making enquiries and considering the uncertainties described... and the ongoing efforts to sell the business as a going concern, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future”, the directors said.

The accounts were for the year to the end of March 2017, and are signed by Ms Comiskey and Ms Lacey, and dated February 2018.

Last week, gym members were sent a text message late at night to say the gym was ceasing trading. Creditors subsequently received a letter by post inviting them to a meeting on July 16 for the purpose of endorsing Gerard Murphy, of Gerard Murphy & Co, St Mary’s Rd, Midleton, Co Cork, as liquidator.

When contacted by the Irish Examiner, Mr Murphy said the company had “bent over backwards” with the receiver “to try and avoid this day”. He said he would not stand in the way of anyone who expressed an interest in taking over Source as a going concern.

The gym’s membership is estimated at more than 1,000. It opened in the 1990s and has traded as Source Health and Fitness since March 2002. It had 35 staff.

Monies for use of the facility were pre-paid as recently as last week.

Accounts for the year to March 31, 2017, state that the company was “carrying amount of financial liabilities” at €703,515. Rent payable for the year ended March 31, 2017 was €84,427.

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