Punchestown companies may be struck off

The companies responsible for running Punchestown Racecourse face the possibility of being struck off as a result of a dispute between members of its owner, the Kildare Hunt Club (KHC).

KHC members and Punchestown directors, John Ross and Nick Bullman, are seeking to have a number of leases on property rented by the club to the companies in 1997 invalidated on the grounds they should not have been granted in the first place.

The leases have subsequently been pledged as security for money owed to AIB and the US-based Getty family, which is due €2 million, and also for €23 million in State funding.

State body, Horse Racing Ireland (HRI), which has been managing the course since 2002, is opposed to the cancelling of the leases. It has a legal opinion from senior counsel, Thomas McCann, confirming that the leases are valid. The KHC's trustees, Will Fennell, Felix Heffernan and Nick MacDermott, are also against any attempt to void the leases.

Accounts for 2004 for Punchestown's trading companies, Blackhall Racing, Punchestown Developments and Punchestown Enterprises, were prepared and approved by auditors, PricewaterhouseCoopers, three months ago.

However, the two directors have not signed off on them and they have not been filed with the Companies' Registration Office.

Mr Bullman said yesterday that the notes to the accounts do not show the correct VAT liability. Based on the fact that the leases are invalid, he said this should be €150,000. The notes allow for a higher figure. However, the new calculation was made after 2004.

Punchestown management fears the companies could be struck off as a result of the delay. Limited companies that do not file their accounts on time are struck off the register; lose the protection of limited liability, and can ultimately be dissolved.

Mr Bullman argued that there was no danger of this happening, but said that the companies would have to pay late filing fees.

The two directors propose replacing the leases with new ones. They want to offer a guarantee based on a freehold interest in the 250-acre racecourse facilities to the State. Currently, its security relates to the entire 450-acre property.

Last month, they put seven motions to the club's annual general meeting (agm) that would have paved the way for the alternative arrangements and for the replacement of the trustees. The meeting was heated and was adjourned until next month.

The trustees wrote to members urging them to reject the proposals on the grounds they could result in the club incurring an "enormous, unnecessary" debt, which could in turn force it to sell some of its land at Punchestown and involve it in costly litigation.

Mr Ross made it clear in a recent letter to KHC chairman, Farmers' Journal editor, Matt Dempsey, that he (Mr Ross) and his supporters were considering legal action and would not compromise. Mr Ross could not be contacted for comment.

Punchestown was losing over €400,000 a year when HRI moved in in 2002 and appointed former Kerry Group executive, Dick O'Sullivan, as general manager. Since then, the business has turned around. It made a €370,000 profit in 2004 and an estimated €400,000 last year. In December, it made a €150,000 repayment to the Getty-owned company, GT Equinus.

Yesterday, Mr O'Sullivan said the dispute was creating difficulties for the racecourse's management. "The solution is for people to sit down and talk," he said.

HRI chief executive Brian Kavanagh said: "It's disappointing there are difficulties within KHC, particularly as we are approaching Punchestown's main meeting in April," he said.