THE HIGH Court has appointed provisional liquidators to a company operating the Brook Lodge Hotel in Aughrim, Co Wicklow, after being told it was insolvent and unable to pay a €1.2 million debt to a creditor.
Mr Justice Roderick Murphy was also told three directors of the hotel operating company, Durgman Entertainment Ltd, had carried out a threat to transfer the assets of the premises to a new company allegedly set up in an attempt to avoid a court order requiring them to pay the €1.2 million debt.
Eamonn Galavan, Clonroche, Enniscorthy, Co Wexford, who is owed the €1.2 million, is to bring contempt proceedings in the Commercial Court on Monday against three Durgman directors: Bernard Doyle, Waterside, Dargle Vale, Bray; Evan Doyle, Macreddin Village, Aughrim; and Eoin Doyle, Levmoss Hall, The Gallops, Leopardstown, Dublin.
The contempt application arises from their alleged failure to abide by an order of March 3rd, 2010, requiring Durgman and two related companies to purchase €1.2 million worth of shares from a company owned by Mr Galavan.
An appeal was lodged against that order on March 16th, 2010, but no steps have since been taken to prosecute that appeal, Mr Galavan said in an affidavit.
The petition to appoint Neil Hughes and Kieran McCarthy, of Hughes Blake Accountants, as provisional liquidators was made yesterday on an ex-parte (one side only) basis by senior counsel Gary McCarthy for Mr Galavan.
Mr McCarthy said discussions took place between Mr Galavan and the directors of Durgman in which it was agreed the company would pay Mr Galavan €100,000 over five years on condition certain information would also be provided to Mr Galavan in relation to transfers to related parties of the company.
During those negotiations, the directors of Durgman threatened, unless Mr Galavan accepted this deal, they would immediately liquidate Durgman and use a new company, Hollbell Ltd, to operate the hotel and associated activities, counsel said.
The deal never happened and on June 29th last, Mr Galavan was shocked to learn the threat to set up a new company had been carried out, counsel said. The hotel continues to trade.
Given the “cavalier way” the directors had conducted themselves by seeking to transfer the assets of the company at no value to another company, counsel said he was seeking the appointment of provisional liquidators.
Despite having a gross profit of €2.8 million last year, the Brook Lodge has liabilities over assets of €4 million, counsel said.
Mr Justice Murphy agreed to grant the liquidators power to appoint a solicitor, hire and fire employees, take possession of the company’s assets and open bank accounts. The matter will come back before the court later this month.