Foley’s secures examinership despite bank objection

The High Court has confirmed an examiner to companies operating the family-run Foley’s bar and restaurant business, and the adjoining O’Reilly’s bar, on Dublin’s Merrion Row. The business employs about 20 people.

Bank of Scotland, the companies' major creditor which is owed some €5 million, had opposed examinership.

A receiver appointed by it, but later discharged by the court, had reached an agreement for sale of the premises at an undisclosed price, the court had heard. Among the factors taken into account by Ms Justice Mary Finlay Geoghegan in exercising her discretion to confirm an examiner was evidence indicating that the business had a reasonable prospect of survival provided certain conditions were met.

Bank's failure
She also took into account the bank's failure to tell the directors it had appointed a receiver to one of the companies on the day of that appointment last month. In a detailed judgment yesterday, she confirmed examinership for the two companies involved, Belohn Ltd, the operating company, and Merrow Ltd, the holding company.

She directed the examiner to prepare a report outlining a survival scheme and addressing certain matters raised by the bank’s receiver within three weeks.

A successful survival scheme would have to address how to obtain significant funding from a new investor, given Bank of Scotland’s refusal to provide further finance, she said.

The scheme would have to include a payment for the bank consistent with the value of its current security. Five expressions of interest in investing had been received from persons in the trade outside the Foley family, she noted.

Receiver's suggestion
She also directed the examiner's report to address the receiver's suggestion that low wage payment figures for a certain period suggested staff might have been paid in cash off the books at that time.

That was strongly denied by director Seán Foley, who said the low rates were due to members of his family working unpaid in the business and higher wage costs during the receivership. The examiner must also address the receiver’s claim that some €140,000 was not accounted for in nine-month management accounts and a statement of affairs as at October 11th, last year.

If the examiner’s report did not disclose a satisfactory state of affairs on those issues, she would consider what further order might be required, the judge said.