Businesses that missed the boom
Date: 29-08-2005
Source: The Sunday Business Post
Despite the buoyant economy, more than 200 Irish companies ceased trading in the first six months of this year, according to figures from business consultant Farrell Grant Sparks (FGS). A total of 208 companies went into liquidation, receivership or examinership, up more than 7 per cent on the 194 failures in the same period last year. Dublin firms accounted for exactly half of the insolvencies recorded so far this year. Engineering and construction firms once again dominated the figures, with 55 firms in the sector going out of business. This accounts for more than a quarter of the total. Declan Taite, director of corporate restructuring with FGS, said the number of construction company failures was in stark contrast to the general strength of the sector. ?Explanations for this apparent anomaly can be attributed to the consolidation within the sector, high insurance and fuel costs, and smaller operations no longer being economically viable due to increased pressures on margins and turnover,? he said. The number of company failures in the hospitality sector increased by more than 80 per cent on last year, as 42 hospitality companies went into liquidation, receivership or examinership. Taite pointed to the ?introduction of the smoking ban, price increases imposed by breweries and publicans, and more stringent hygiene controls'? as possible reasons for the collapses. The figures show that 21 technology and computer companies went bust during the first half of the year, while eight transport and haulage companies failed. Eighteen retail firms went bust, and five media and marketing companies also went under. The majority of the companies were based in the greater Dublin area, with the capital accounting for 104 failures. Cork was a distant second on the list with 15, while Limerick recorded 13 failures. Kildare and Wicklow recorded 11 and six respectively. Taite said it was worth noting the number of company directors who were exploiting a legal loophole by liquidating defunct companies but not appointing liquidators. This happened in 11 cases during the period and meant that creditors did not receive any dividends. At the same time, no official reports were filed to the Director of Corporate Enforcement. ?This trend, if it were to continue, may be of particular interest to the Revenue Commissioners and the Office of the Director of Corporate Enforcement,? Taite said. The insolvencies in the first six months included a number of well-known companies and individuals. Michael Flatley, the multimillionaire behind Lord of the Dance, petitioned the High Court to wind up Castlehyde Hotel in Co Cork, claiming he was owed more than ?2 million from the business. Flatley had privately bankrolled the luxury resort for three years and was the beneficial owner of CH Management, the hotel's holding company. Immediately after taking over running the hotel, he installed his former butler, Patrick Kelly, as hotel manager, and the pair attempted to develop the business by focusing on the wedding market. However, the hotel could not turn a profit and Flatley had the company wound up in the High Court. A number of long-serving staff at the hotel are still owed money. Fran Rooney, the former chief executive of Baltimore Technologies and the Football Association of Ireland, was another high-profile individual to lose out. He lost more than ?600,000 in the collapse of e-learning company, Addoceo Digital Media. Creditors of the Addoceo, which traded as Skillspro, were told that Rooney had invested more than ?600,000 in the firm founded by his brother, Dermot. The company had debts of more than ?1.1million, and blamed rising overheads and struggling sales for its demise. In April, Shamrock Rovers FC petitioned the High Court to have the club placed into examinership to protect it from its creditors. The club has debts of ?2.4 million. A proposed investment package by British businessmen Brian Quigley and Brooks Mileson to save the club fell through last month. The examiner to Shamrock Rovers, Wexford accountant Neil Hughes, is still attempting to put a new deal in place. One of the more unusual collapses occurred in March, when the liquidator of a Co Carlow company, Boherduff Engineering, raided a number of locations throughout the south-east to recover assets belonging to the company. The assets were moved from the company's headquarters in Bagenalstown shortly before the firm was wound up. The firm had debts of more than ?1.6 million. Two jeeps, a gantry crane, a prefab and a large amount of scaffolding equipment were recovered in the Garda-escorted raids. Last month, a company owned by Sam Stephenson, one of Ireland's most famous architects, was wound up. Stephenson Architecture Engineering, which traded as Sam Stephenson and Company, owed creditors ?500,000. Stephenson was the architect of the distinctive Central Bank of Ireland building in Dublin's city centre. He also designed the first phase of the controversial Dublin Corporation offices at Wood Quay, which had to be altered after remains of Viking Dublin were found on the site. Fota on Ice, an Offaly-registered company that operated seasonal ice rinks in Cork and Galway, was put into liquidation with a deficit of ?818,000. Margaret Edgill, the owner of the company, blamed a freak storm that blew one of the firm's ice rinks into a river for contributing to the firm's collapse. ?One does not go into business to go out of business,? she said. ?It is a very sad situation all round.? In February, Affordable Modern Dwellings, a Kildare construction company that had responded to an appeal on the Marion Finucane radio show for affordable housing, collapsed. It had debts of about ?3 million. A liquidator was also appointed to Bilcon Construction, a Galway construction company that employed 160 workers. The company owed creditors ?4.5 million. The Farm Media Group, the Dublin TV production company, was placed into examinership by the High Court late last month. The company, which was nominated for an Emmy award last year, owes its creditors ?4.5 million. Rover Ireland, a wholly-owned subsidiary of the British MG Rover Group, owed between ?5 million and ?7 million when it was placed into administration earlier this year. The British company collapsed with debts of more than ?1.3 billion.
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