The High Court has refused to continue court protection for the Waterford city-based Tweedy Group of bars and nightclubs which has debts of €6.6 million. The court also noted the companies’ examiner had lost faith in its management.
Ms Justice Mary Finlay Geoghegan ruled today that survival schemes for the companies proposed by examiner Kevin Hughes did not meet the legal test of demonstrating they have a reasonable prospect of survival.
The schemes did not include a binding commitment to invest in the companies due to issues over guarantees on loans given by the group’s directors, Robert Tweedy and his sister Anne, she found.
A proposed investor, Barrowville Estates Ltd, had wanted to limit the payment that could be made to the guarantors but that could not be done.
The Tweedys had insisted they were prospective creditors in any winding up because they had provided guarantees on €8.2 million loans given by Bank of Ireland to two of the group’s companies, Eylewood Ltd and Woodman Ltd, the judge noted. The bank was also a secured creditor and was owed more than €6.6 million by both companies.
Eylewood trades as Muldoons Late Bar and Oxygen Nightclub while Woodman trades as Woodman Bar and Ruby’s Nightclub, both in Waterford.
Ms Justice Finlay Geoghegan said company law cannot be construed as limiting the indemnity rights of the Tweedys’ as guarantors of a company’s debts.
In a winding up, unsecured trade creditors would probably receive no payment while the guarantors would be called upon to pay the full debt due to the creditors, she said. There would be no assets in the companies against which the guarantors might exercise any right of indemnity.
Because the right to an indemnity is not limited, there was no longer before the court a survival scheme based on a binding commitment to invest. Therefore, there were no monies available for investment and the court must regretfully refuse to confirm the survival plan proposed by examiner, Mr Hughes.
The judge said she had made criticisms of the examiner for failing to put before the court any appraisal of the facts or factors relied upon by him in arguing the companies could survive based on the Barrowville investment.
However, she did not underestimate the difficulties faced by the examiner, including the refusal of the Tweedys to co-operate with him.
Mr Hughes had indicated he had lost trust in the management of the company following the paying out of €125,000 cash from a safe in the Woodman premises, including €35,000 to Mr Tweedy and another €25,000 to a company controlled by Mr Tweedy, she said.
The Tweedys appeared to have “lost sight” of their responsibilities and obligations to creditors and employees in the course of their dispute with Mr Hughes whom they had sought to have removed as examiner, the judge said.
They also failed to appreciate the absolute time limit imposed on the examinership process especially concerning their own alternative investment proposal, she added.
The Tweedys were perfectly entitled, as prospective or “contingent” creditors, to object to the survival plan and were also entitled, “although misguided”, to seek to protect their interests as shareholders although the shares were of no monetary value, she said.
