Liquidator appointed to Black Shore group

A LIQUIDATOR has been appointed by the High Court to Black Shore Holdings Ltd (BSH), the insolvent holding company for a large group of companies of Galway businessman John Sweeney, which include a company that owns a 33 per cent stake in Dublin’s Shelbourne Hotel.

Mr Justice Brian McGovern, who appointed Jim Luby as liquidator to BSH, will decide later today whether to grant protection to four other Black Shore companies.

The protection application was supported by most creditors but strongly opposed by Anglo Irish Bank, potentially owed some €55 million on foot of loans and guarantees, on grounds including an “irretrievable” loss of confidence and trust in Mr Sweeney. The Revenue Commissioners have adopted a neutral position.

The liquidator to BSH was sought yesterday by Paul Sreenan SC, for Esso Ireland, which is owed € 12.4 million, and the application was not opposed by BSH. A receiver was also appointed to BSH yesterday by Anglo.

Michael Cush SC, for BSH and other companies, said BSH is not a trading company but it offers management services to other companies in the Black Shore group. It was also the company to which key suppliers in the group were actually contracted.

In affidavits partly read to the court, Mr Luby said Esso wanted liquidation of BSH and would have opposed court protection for it on several grounds, including that a 100-day examinership period would not allow time for a full investigation into the conduct of BSH and its directors. Such matters could be addressed by a liquidator.

Mr Cush said Mr Sweeney had in affidavits taken issue with what was said about him by Mr Luby and Anglo and regarded as “hurtful” Anglo’s assertion it did not trust his management. Mr Sweeney in affidavits said he had spent his whole life building up his business, it was “essentially my life” and he had personally borrowed a lot of money in 2008 which he put into the business.

Mr Sweeney also said he had always been open and accessible to his creditors and Anglo had never said to his face it did not trust his management.

Mr Justice McGovern must decide whether to grant court protection to three fuel companies in the Black Shore group – Sweeney Oil (Retail) Ltd; Sweeney Oil (Moycullen) Ltd; and Sweeney Oil Services Ltd (SOSL). Protection is also sought for Slyne Properties Ltd, operator of the Marriott Hotel Headford Road, Galway, a related spa and with a number of property interests.

Urging protection, Mr Cush said the four companies – excluding their substantial bank debts – were inherently profitable and the interim examiner had received serious and real expressions of interest from six potential investors. The intention behind examinership laws was to facilitate the survival of companies or part of their undertaking, he said.

Counsel also said Fáilte Ireland had in a letter praised Mr Sweeney as an “innovator” in the hotel trade.

Anglo opposed protection for three of the companies but not SOSL as it has no loans to that company. Declan Murphy, for Anglo, said it intended to appoint a receiver as soon as court protection ended and he argued that the position of employees and the wider community would be no different under a receiver than an examiner. It was a “fallacy” to think the examinership application was in any way about preserving jobs, he said.

Counsel said the companies have very significant liabilities to Anglo which the bank intended to call in. The companies were proposing to renegotiate with Anglo and refinance but Anglo was “not in that game” and had said so in most forthright terms.

Appointing an examiner would just leave Anglo in a position where it would end up paying the substantial costs of that examinership if it failed, counsel said. That was not what examinership laws were enacted for. What was being proposed in this examinership was essentially a de facto sale of the companies to persons characterised as investors, he said.

The judge heard the book value of Slyne’s assets in November 2009 was put at €5.25 million but that figure, given the current property market, was probably over-stated by some 40 per cent.