A High Court judge has said he takes “very seriously” a debt mischaracterisation in a failed debt write-down plan for restaurateur Jay Bourke.
Mr Bourke (55) tried to secure a personal insolvency arrangement (PIA) to reduce the bulk of his €13.7 million in debts but this was withdrawn last month following an objection by creditor Pepper Finance, which was owed €12.2 million.
He had also sought to rely on a windfall payment from the flotation of an insurance broker he had invested in, but his hopes were dashed when it went into receivership.
Mr Bourke, who operated popular bars and restaurants including The Globe and Rí Rá, Panti Bar and Eden Restaurant, was subsequently declared bankrupt by the High Court upon the application of Revenue, which was owed €558,000.
Although his PIA application has been withdrawn, Mr Justice Mark Sanfey sought an explanation from Mr Bourke’s personal insolvency practitioner, John O’Callaghan of KPMG, about how Revenue’s entire tax debt came to be categorised as “preferential” in the PIA, when only a portion had preferred status.
Barrister Keith Farry, for the practitioner, said the categorisation was an “error of language” used in circumstances where Revenue had made clear it would only opt in to the arrangement if it was to be paid its debt in full.
The practitioner has sincerely apologised for the error, which was not intentional or done with a view to mislead, added Mr Farry.
Niall Ó hUiginn, for creditor Pepper Finance, which had raised the discrepency at a previous hearing, said it “beggars belief” that an accountant and personal insolvency practitioner would require legal advice to understand the meaning of a preferential debt. He said such situations “do nothing for the integrity and trust” in the PIA system.
Any reader of the PIA was left with the “clear impression” Revenue was legally entitled to be repaid its debt in full, yet it did not have an entitlement for full payment in respect of the non-preferential element of its debt, he told the court.
Under the arrangement, Pepper would have recovered less than 1 per cent of its debt, which related to a contingent liability arising from loans drawn from Bank of Scotland (Ireland) for the renovation of a Co Meath hotel Mr Bourke co-owned.
Mr Justice Sanfey said he took the issue “very, very seriously” and may give judgment on it at a later date. He noted the practitioner had a difficult job in carrying out an arrangement involving Mr Bourke’s “extremely tangled” affairs. However, the judge was not satisfied with the practitioner’s explanation regarding his use of the word “preferential”, which has a “defined meaning” in the Bankruptcy Act.
The case was adjourned.
