Creditors write off €3.5m debts to keep Lynch Hotel Group trading

THE future of some 450 employees across the Lynch Hotel Group looks secure with the High Court in Dublin expected to adopt recommendations put forward by the examiner, which will allow the hotel chain to continue to trade.
The Ennis-based hotel group is due before the High Court this Friday where proposals contained in a report by examiner Michael McAteer of Grant Thornton, a Dublin-based accounting and auditing company, regarding a payment package to creditors will be accepted.
Recently, Mr McAteer met with creditors of the Lynch companies and The Clare Champion understands that approximately 85% of the creditors were prepared to accept proposals whereby preferential creditors will receive 15% and agreed creditors 10% of monies owing to them. The deal will see creditors prepared to write off debts in the region of €3.5million.
With debts in excess of €22.85 million, the Lynch Hotel Group, Ireland’s largest family-owned hotel chain with hotels in Clare, Limerick and Mayo, went into voluntary examinership last July and the High Court, under Ms Justice Mary Finlay Geoghegan, appointed Michael McAteer as examiner.
The companies under court protection are West County Hotel; Dale Park Properties Ltd; Breaghwy House Hotel Ltd; Pyrmont Ltd; LHG Catering Promotions Ltd; Breaffy Wellness Hotel Ltd and Clare Inn Hotel Ltd, all with registered offices at Clare Road, Ennis.
Michael Lynch senior and his son, Michael B, are listed as directors of the companies in examinership.
As regards The West County Hotel, settlements will be reached with both the Revenue Commissioners and Ennis Town Council who are owed €1,446,404 between them. The Revenue Commissioners are owed €689,393 in PAYE-PRSI, €524,083 in VAT and €119,857, while Ennis Town Council is owed €113,071. Both bodies have agreed to write off 85% of what they are owed, which amounts to €1,229,443.
Mr McAteer says the group has a reasonable chance of survival as a going concern and that it would be more advantageous to the members and creditors as a whole to attempt to continue the business of the company rather than wind it up.
He also revealed that the group’s employees have also agreed to wage reductions and to have their working conditions modified.
This was supported by SIPTU official, Tony Kenny, who said a couple of weeks ago that union members across the Lynch Hotel Group agreed to give up a half a day a week free to the company for those in full-time employment and a pro rata arrangement for those in short time working, in an effort to restore the competitiveness of the group and to secure their jobs.
Mr Kenny said that SIPTU members also agreed to work pro-actively with management of the Lynch Hotel Group to secure future business going forward.
He confirmed to The Clare Champion that what was owing to the Revenue Commissioners did not impinge on workers’ entitlements.
However, one Ennis businessman was highly critical of the fact that The West County Hotel will only have to pay €16,960 of the €113,071 owed to Ennis Town Council.
He said that the onus is on all businesses to honour their liabilities and under no circumstances would he be favourably disposed to any increases in rates when the Lynch Hotel group is getting such a settlement.
Another Ennis businessman, who didn’t wish to be named, said he was prepared to accept the 10% settlement rather than see the company wound down.
“It’s the lesser of two evils really. At least by accepting the 10%, I’ll get a portion of what I’m owed. The alternative is to wind the company down and then I’d have nothing,” he said.
In documents prepared by the examiner, the West County Hotel’s total deficit is €19,893,159 and of that, €13,038,404 is owed to other group interests, including €216,210 to managing director, Michael B Lynch.
Some of the agreed creditors who will receive 10% of their debts include Fexco Asset Finance, which is owed €858,398; accountancy firm BDO Simpson Xavier, which is owed €258,862; Dunnes Stores, which is owed €119,070 and Sweeney McGann Solicitors, which is owed €327,479.
In his report on The Clare Inn Hotel, the examiner has listed a sum of €788,037 as owed to creditors. Under the proposed arrangement, Clare County Council will receive €20,645 of the €137,634 owed, while Celtic Lined Limited (€65,220), Dromoland Castle (€41,417), Britvic Licensed Wholesale (€32,813), Kelly Butchers (€23,087) Corrib Food Products (€22,476) and Musgrave Cash and Carry (€17,614) will each receive 10% of monies owing.
The hotels operated by the Lynch Hotel Group include The West County Hotel in Ennis; The Clare Inn Hotel, Newmarket; George Boutique Hotel and South Court Hotel, Limerick; The Breaffy House Hotel and Spa, the Breaffy Woods Hotel and Breaffy Suite in Castlebar and The Ocean View Hotel in Kilkee.