High Court appoints examiner to Kilkea Castle hotel

AN EXAMINER has been appointed by the High Court to a company operating the four-star Kilkea Castle hotel in Co Kildare, which employs 65 people.

Ms Justice Mary Finlay Geoghegan yesterday granted a petition by the directors of Leoville Ltd, operator of Kilkea Castle, to appoint an examiner after she found the evidence indicated it had a reasonable prospect of survival.

The hotel is Ireland’s oldest inhabited castle and has had a four-star rating since opening in 1989.

It is operated by Leoville under a 20-year lease from September 1996 granted by Arnosford Ltd.

In its petition presented by Bernard Dunleavy, the directors said the hotel had traded successfully until 2006 but sustained losses over the past three years, following Arnosford’s decision to open a 45-bedroom lodge complex in the golf club adjoining the hotel and a “dramatic reduction” in the international tour-bus business, on which it had relied.

The company had liabilities of some €1.5 million and its directors had supported it with loans of more than €889,000.

Because of these difficulties, the company had altered its business model to concentrate almost exclusively on larger wedding and corporate functions as opposed to overnight custom, the directors said.

Given that the hotel industry in Ireland has been severely affected by the economic downturn, it was encouraging that this new strategy had resulted in “a significant turnaround” in the company’s fortunes.

The directors said the company had also succeeded in significantly reducing all major overheads except rent, which was €515,000 per annum. The landlord had adopted a “hardline” position in refusing to reduce rent to about €350,000 but the directors hoped negotiations might yet alter that position.

Alison Keirse, for the Revenue Commissioners, said it was neutral on the examinership petition but had a concern about the rent issue.

The directors said the rent due to Arnosford was separately pledged to Anglo Irish Bank and Leoville had approached Anglo about the matter The company also had some €900,000 in terms of future business secured on paid customer deposits and it was hoped the opening of the motorway from Kilcullen to Carlow would further improve accessibility to the weddings and functions market.

Having examined the evidence, including an independent accountant’s report and an affidavit of company director Morgan Cassidy, the judge said she was satisfied the evidence indicated a reasonable prospect of survival and she would exercise her discretion in favour of extending protection.