Recent attempts by Bank of Scotland plc to enforce its security over the company operating Foley’s Bar and O’Reilly’s Bar in Dublin city centre have been frustrated following various challenges in the High Court, culminating in the appointment of an examiner.
The Belohn Limited is the company which operates Foley’s Bar and the adjoining O’Reilly’s Bar. Its parent company is Merrow Limited. The two companies are reported to owe the bank in the region of €4 million and €1 million respectively.
In October 2012 the bank appointed a receiver and manager over the assets of The Belohn Limited. On Friday 22 March 2013, the High Court held that the appointment of the receiver was invalid as the deed of appointment had not been executed under seal, as required by the terms of one of the mortgages.
Later that same day, the bank served letters of demand on both The Belohn and Merrow. The letters, which were served at 4.15 pm, demanded repayment of all sums due by 5:00 pm that day. Unsurprisingly, the companies failed to comply with the demand within the 45 minute deadline. The bank proceeded to appoint a receiver to Merrow Limited sometime that evening, but no receiver was appointed to The Belohn.
The following morning, unaware that a receiver had been appointed to its parent company, The Belohn petitioned the Court for the appointment of an interim examiner. The application, which was made without notice to the bank, was granted by the Court.
It was not until the afternoon of Sunday 24 March when the directors of Merrow learned of the appointment of the receiver. They immediately moved to petition the Court for the appointment of an interim examiner. The application was heard in Judge Hogan’s private house, as the three-day window within which to seek the appointment of an examiner was drawing to a close. The judge agreed to the appointment despite the fact that the statutory requirement to produce an independent accountant’s report had not been complied with. The judge was told that it had not been possible to prepare the report as the receiver who had previously been appointed over the assets of the company had refused to hand over relevant documentation.
The bank then sought to set aside the orders made by Judge Hogan. The judge refused to set aside the order made in respect of The Belohn on the basis that the unusual circumstances of the case justified the appointment of an interim examiner. The judge considered that a report of an interim examiner on the current state of affairs of the company would be beneficial as the directors were not in a position to provide such information given that they had been wrongfully excluded from the day to day running of the company for six months.
As regards Merrow, the bank complained that at the hearing of the petition, the Court was not informed that the receiver had offered to return all relevant documentation to the company. While the judge accepted that this omission was due to a bona fide oversight, he considered that it would be unjust to allow the order to stand. Accordingly, the judge set aside his earlier order appointing an interim examiner.
On 18 April 2013, Judge Finlay Geoghegan in the High Court appointed an examiner (as opposed to an interim examiner) to The Belohn, and to Merrow as a related company. The Court directed the examiner to report to it within three weeks regarding The Belohn’s prospects of survival and a number of matters raised by the bank regarding the management of the bars.