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Creditors await Lynch payment


A NUMBER of small and medium enterprises who had to settle for a 90% write-off of debts owed by the Clare-based Lynch Hotel Group are still waiting for their accounts to be settled, it emerged this week.
A Clare Champion survey of creditors, owed varying amounts from a few hundred to a few hundred-thousand euro, revealed that some creditors only received 10% of outstanding debts recently, weeks after the High Court hammered out a deal under the Examinership process.
A group spokesman, however, pledged that all creditors would be paid the amounts agreed under the High Court settlement.
The Lynch Hotel Group, which had debts of over €22.85 million, went into voluntary Examinership last July in order to protect its business and the employment of 530 staff members, 250 of which are based in its three Clare hotels – The West County, Ennis; The Clare Inn, Dromoland and The Ocean Cove in Kilkee.
Examiner Michael McAteer of Grant Thornton, a Dublin-based accounting and auditing company, devised a scheme of arrangement, which saw preferential creditors accept 15% and agreed creditors 10% of monies owing.
With creditors consenting to write off debts of €3.5 million, the family-owned hotel group was given a deadline of December 30, 2009 following the Examinership proceedings, to make payments to hundreds of creditors.
However, The Clare Champion has learned that the group was not able to meet this deadline for a number of its creditors who received payments after the cut-off date.
The behaviour of the group was described as “sickening” by Councillor Martin Conway, who claimed the hotel chain had received a “bail out” from their banks, local authorities and hundreds of small businesses that supplied them with goods and services.
The Ennistymon councillor, who was contacted recently by creditors experiencing their own serious trading difficulties, said he was taken aback to learn they still hadn’t received the 10% owed to them under the court-appointed examiner’s order.
Having tabled a motion at the January meeting of Clare County Council, he asked the council’s head of finance if the local authority was paid 15% of the €137,664 it was owed.
Councillor Conway said he learned a few days after the meeting, that the money wasn’t paid and the matter is now in the hands of the county solicitor.
A council spokeswoman confirmed this money was subsequently paid on January 20 last.
Councillor Conway has proposed that the legislation allowing a court-appointed examiner should be overhauled to allow creditors, who are not paid within the timeframe under the terms of the settlement, to automatically return to the court.
“It is completely unacceptable for businesses who are struggling to survive that they should have to wait in limbo for their 10c in the euro. If the directors have personal assets, then they should be used to fund small creditors whose survival is reliant on getting their money,” he said.
Mr Conway added that if a company gets back to profitability following an arrangement under this process then there should be some mechanism for creditors, who took the pain to recoup their money.
“In a couple of years’ time, if this company makes substantial profits, the shareholders will benefit and the creditors who took the hit get nothing. This is completely unfair,” he said.
The Clare Champion has learned that Mulqueen florists, Clare Bar Supplies and Clare Foods received payment within the specified period.
However, NC Paint and Décor stated that it received a payment last week while The Clare Champion, FHB Building Supplies, Shannon and Kelly Refrigeration all got paid on January 13.
Management at Ennis Curtains and Blinds, Dan McInerney and the Irish Music Rights Organistion (IMRO) claimed they had not received any payment up to Wednesday morning.
According to High Court documents, the West County Hotel has listed AIB, Bank of Ireland, Bank of Scotland as secured creditors in the sum of €9.6 million, €3.4 million and €7.242 million respectively.
None of the banks confirmed whether payments had been received when contacted by the ‘Champion.
Ennis Town Council and the Revenue Commissioners also remained tight-lipped about whether they received 15% of the overall figure for commercial rates of €113,071, PAYE/PRSI of  €689,393 and VAT of €524,083.
P K Travel, Ennis Lock and Key, Clare Road Tyres, Celtic Line, Fexco Finance, Patrick Bourke (Ennis), Corrib Foods, Celtic Linen declined to comment.
Dromoland Castle (owed over €42,000 by the Clare Inn and West County Hotel) and Dunnes Stores (owed €119,070) hadn’t responded to queries at the time of going to press, neither had Shannonside Oil, Ennis Lifts or Sweeney McGrath Solicitors.
James Kelly from Kelly Butchers, said that he felt very aggrieved that the hotel group could continue to trade after his business suffered a big hit of having to write off debts of over €25,000 for goods supplied over an 18-month period.
Describing the entire process as very unfair, Mr Kelly confirmed that he refused to continue supplying the group after this unsatisfactory deal.
Carol Quinlivan of Ennis Curtains and Blinds said she was very upset at losing almost €3,000 after she had previously planned to use this money to pay commercial rates and tax.
She said that it was appalling that she had to chase the group for just 10% of the money they owed and was forced to enter into an arrangement with the town council to make weekly instalments for rates.
Another creditor, who didn’t wish to be named for commercial reasons, claimed the whole deal was unfair on creditors who bailed out between 400 and 500 jobs in the hotel chain while they were left struggling.
He warned that even more Clare companies would be forced out of business if they were hit by a similar 90% write-off or more bad debts.
“Creditors who take a hit when a company goes into Examinership or receivership should get some financial support from the Government,” he said.

 

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