Director must provide accounts or face jail

A DIRECTOR of a company that owns a luxury golf development in Co Cork has one last chance to avoid being jailed for contempt of High Court orders to produce its full financial details.

Kelcar Developments Ltd now appears insolvent with debts of some €27 million, Mr Justice Peter Kelly noted yesterday.

The judge said Frank McCarthy had adopted an “ostrich-like” approach to the situation of his Kelcar company, owner of the Blarney golf resort development, and should now take advice about its position and that of related companies, and then talk to its bankers.

The judge said it had emerged the enterprise was “a house of cards”, that Kelcar was now insolvent and, if it was, then so were the other companies within the group. Some €27 million was owed to Allied Irish Bank.

Padraig Lawlor, auditor to the Kelcar companies, said its accounts and tax affairs were in order and its assets included 38 holiday cottages that were for sale but remained unsold.

Mr McCarthy was before the court yesterday for further cross-examination about the accounts of Kelcar and to respond to an application by MF Irish Golf Design Ltd to jail him for alleged contempt of court orders requiring him to produce the financial books and records of Kelcar.

MF had sought to examine Mr McCarthy over Kelcar’s prolonged failure to pay in full a €678,268 debt due for the design of the Blarney golf course. After court proceedings, Kelcar paid some €400,000 last April but has failed to pay the remaining €278,306, due on October 18th last.

The proceedings relate to a €2.9 million contract of December 21st, 2004, between MF and Kelcar for designing the golf course, which was part of a development including 56 luxury two-bedroom holiday cottages and a four-star hotel.

Earlier yesterday, Mr McCarthy agreed to a court order restraining Kelcar reducing its assets below €9 million. That order was sought by Bowen Construction Ltd, which constructed the Blarney golf resort development and is now seeking payment in ongoing arbitration proceedings.

In relation to the MF application, Mr McCarthy said he had produced bank statements and audited accounts and believed this met the requirements of the court order. He agreed he had not contacted the firm’s auditor relating to the requirement to produce the books and records.

Gary McCarthy, for MF, applied for Mr McCarthy to be jailed for “wilful disobedience” of the court order. MF was still unaware of the up to date financial position of the Kelcar companies, counsel said.

Counsel for Frank McCarthy rejected the claim of wilful disobedience and said her client had only recently sought legal advice about the order to produce. Prior to that, he consulted the internet about what was meant by books and records and believed the documents he had produced meant he had complied. Mr McCarthy was in “dire straits” but his actions were not those of a person seeking wilfully to disobey the court.

Mr Justice Kelly said he was satisfied Mr McCarthy understood he was obliged to produce more financial records to the court than he had produced and said it was “quite extraordinary” he had not contacted his auditor about what he needed to do to comply.

The judge said he would give Mr McCarthy until December 17th to produce all the material held by the auditors and to take advice about the status of his companies.