The human cost of business failure: How a publican lost to banks and Revenue

It is a fact of life that companies fail. At the height of the last downturn, an average of five Irish businesses went bust every day.

For the professionals who earn fees from insolvency, it meant a boom within a bust. But what about the people left behind in the wreckage? For them, it means desolation.

Businesses fail for myriad reasons and with disparate effects. Each has their own story. This one – dramatic and raw for those affected – belongs to Seamus and Eileen McPartland, who owned the landmark Fallon’s pub in Dublin’s inner city until it was wrenched from their grasp just as Ireland recovered.

They are a quietly spoken couple who found themselves ranged against the Revenue Commissioners and two banks – ACC and Bank of Ireland. The creditors and their agents have all been paid. The McPartlands now have nothing.

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Theirs is just one cautionary tale of personal destruction wrought in a business failure. What’s worse, they claim it wasn’t their fault and feel harshly treated.

Whether or not all their grievances are valid, the effect on them is undeniable. It’s to be seen on their faces, heard in their voices. And it isn’t yet finished.

“Everything is gone. How can we move on with our lives?” asks Seamus.

A disastrous year

Eileen is a Dubliner who now teaches childcare. Her husband, Cavan native Seamus, is a former barman who bought Fallon’s in 1989. They did the pub deal on their honeymoon.

“We went to Rome to get married so we could save money to buy the pub,” says Eileen.

"He said Seamus would never get a bank loan again and could never run the pub because he was blind with a brain injury. He said we should sell our family home to pay back the bank. It all started from there"

Seamus ran the pub, a single-room bar at the entrance to the Coombe, opposite St Patrick’s Cathedral. It is sometimes known as the Capstan Bar, due to the huge old lettering on the side of the listed building. To locals in the Liberties, it is always Fallon’s.

All went well and, through hard work, it provided a good living for them and, later, their two children. They acquired the house next door to the pub. Not to live in, but for an adjacent strip of land. The smoking ban came in 2004 and it was a possible smoking area – Fallon’s is “landlocked”.

The smoking ban year did prove disastrous, but for a different reason. One day in July 2004, Seamus felt an awful pain in his head and managed to drive himself the 2km to St James’s Hospital. He had a brain haemorrhage.

“I actually knew what it was. I got in the car, but things get a bit hazy after that,” he says. It left him almost blind – only about half his sight has since returned – and with a painful, ongoing brain injury with intermittent confusion. It also left him unable to work at the pub.

They bought the adjacent house – which they rented out – via their company that owned the pub, Alliance Taverns. It was funded through a loan of over €300,000 from Bank of Ireland (BoI). Within a week of Seamus getting out of hospital in August 2004, a bank executive called to their family home.

“He said Seamus would never get a bank loan again and could never run the pub because he was blind with a brain injury,” says Eileen. “He said we should sell our family home to pay back the bank. It all started from there.”

Later, in a letter to Minister of State for Disabilities Finian McGrath, Seamus would describe their ensuing experience with the bank as “torture and terror”. What follows is their version. BoI declined to comment on the details this week.

Eileen says Seamus became upset the day the BoI official came: “He was talking about Seamus’s future, like it was the end for him as a businessman. Even I wouldn’t have done that in front of him.”

According to the McPartlands, the official started contacting them weekly, sometimes twice a week. Eileen usually took the calls.

“He wanted to know our weekly turnover, what we were going to sell, what our plans were. Seamus couldn’t work, so I had to take on the pub and mind the kids. The bank executive told me a woman wouldn’t be able to run a pub in Dublin 8.”

They claim this continued for over a year. The bank cut their overdraft in half. Some cheques subsequently bounced, including to Revenue. Seamus was in London visiting friends with their young daughter when he went to take his wages out in sterling on the company credit card. The ATM swallowed it. When he rang BoI, he says he was told “the recovery department” wanted the card.

His BoI sterling account across the Border in the North was closed. The balance arrived in the post with no letter, just a post-it note stuck on the cheque.

“We couldn’t figure out why we were under so much pressure,” says Eileen. “Then, in August 2005, the official asked us to regularise the security. That stood out.”

A solicitor friend checked the house mortgage documents and told the McPartlands that Bank of Ireland hadn’t registered the charge in time, and so had a problem with its loan security. The couple agreed in August 2005 to “regularise” it.

“It was a moral issue. We had borrowed the money. We knew we’d have to pay it back. We also thought it would buy us some peace,” says Seamus.

Throughout the pressure, they kept up with payments on loans, including to ACC, which had a charge on the pub. But they fell behind with Revenue. Seamus sold his car to pay bills. Matters were compounded when Fallon’s lost custom due to problems with former staff members. This was later outlined in court documents.

You need a tax clearance certificate to renew a liquor licence. In 2007, the cert was lost after being sent to the wrong address. The McPartlands blame Revenue, which blames them. With no licence, the Garda made them close the pub.

It took six weeks to reopen, and cost €50,000 via a whole new court application. They still paid staff but lost a huge chunk of income. The McPartlands say all of this ratcheted up the pressure on their business and family. By 2007, they were €47,000 behind on taxes, and trying to negotiate terms.

Eileen says they wanted to keep up, but claims Revenue was hard to deal with. It was easier to let demands go to the Sheriff, who would more readily accept terms. Although half blind, Seamus once paid a €25,000 bill by walking to the Sheriff’s office in Temple Bar every week for 25 weeks with €1,000 in cash.

Eileen struggled to mind the kids, her husband, run the pub and negotiate with the banks and tax officials. Emails and documents show Seamus told Revenue of his disability due to brain injury, and asked for help from a Revenue access officer. The officer declined to help him negotiate but he was told he could get documents in braille. He hadn’t learned braille – he had a recent brain injury.

They later discovered they had also been put into a Revenue pilot project to monitor how taxpayers reacted to different ways of communicating.

“We physically changed under all the pressure,” says Eileen.

The economic collapse of 2008 challenged businesses everywhere, including Fallon’s. They topped up their ACC loan by €30,000 to €192,000 to pay for pub improvements, but at the last minute, used it for tax. ACC found out and, Eileen claims, threatened to call in the loan because its funds went to another creditor.

“That frightened us,” she says. ACC did not then call in the loan.

They went interest only with BoI and ACC. Business continued to decline. By 2010, they had fallen further behind with Revenue. In a bad market, they couldn’t sell the pub to clear debts even if they wanted to.

Still, Seamus tried to “feel his way back into the business” by coming down to sweep the pavements around the pub: “It was like a mapping thing. I was preparing to build myself back up again.”

As the economic pressure eased following the State’s bailout, trade improved. They got back on interest and principal with the banks, but not up to date with Revenue. Later, in a letter to McGrath, the State agency claimed it did all it could to help and blames the McPartlands for their woes.

Regardless, by 2013, they owed Revenue €247,000. Seamus felt they were still “a good bet”. Then, their world began to cave in.

They had been operating for a period again without a liquor licence, as they struggled to get clearance certs. Meanwhile, Revenue also made a demand for full repayment. The couple tried to raise a loan.

“We tried to remortgage our family home to pay off the taxes, but we couldn’t get a loan to pay taxes,” says Eileen.

Revenue issued a winding up petition. Even though they had missed no bank payments, in October 2013, ACC put a Grant Thornton receiver on the pub. BoI put another Grant Thornton receiver on the house next door. Derek Ryan of HLB Ryan was appointed by the High Court as liquidator to Alliance Taverns.

The McPartlands say ACC told them the receiver was being put in to apply for a new liquor licence. Seamus believed it was a “friendly” receivership and they’d get the pub back.

“Maybe I was stupid. Maybe I was naive.”

A management company was installed by ACC’s receiver, and the McPartlands ran it day-to-day for them as employees, even longer hours than before, they say. They understood they would be able to buy the pub back from ACC through a refinancing, or later, with funds from an outside investor.

Their dealings with Ryan were tense. He claimed €226,000 in cash payments between 2011 and 2013 could not be accounted for, even though the accounts were audited. The McPartlands claim bank draft records showed the cash was accounted for, and highlighted it was a chaotic period during which they were juggling payments here, there and everywhere.

Seamus met Ryan in the pub's snug. His recollection of that meeting is that Ryan accused him of taking the cash to invest in property. Speaking to The Irish Times, Ryan rejects that he "accused" him. He acknowledges he asked Seamus where the money went and "asked" if he might have invested it in an ill-fated property venture.

“These were reasonable questions to ask,” insists Ryan, who has legal obligations to investigate.

A record of a later meeting between Ryan and the McPartlands, in the possession of The Irish Times, shows he told them that "it goes without saying that, in the absence of an explanation, it is assumed you took the cash personally".

Ryan later took director restriction proceedings against both the McPartlands in the High Court over this issue. They provided their documentary evidence to the contrary. In March 2016, a judge found they acted “honourably and honestly” and refused to restrict them.

People on the street think this happened because I bought a load of land, and I didn't. Things happened. We tried our best, and we were vulnerable"

Meanwhile, back in 2014 and unbeknownst to the McPartlands, a row broke out between Ryan and the two bank receivers. Ryan wanted control of the sale of the pub and house together: the receivers refused.

The McPartlands’ solicitor later described it as an insolvency practitioners’ “pissing contest”, with the couple caught in the middle.

It went to a High Court case, where Ryan raised the issue of the purportedly missing €226,000, and complained that the McPartlands were still handling cash. The couple are highly aggrieved that, as they see it, their reputation was brought into question in a court case to which they weren’t party and had no knowledge.

BoI’s receiver sold the house, clearing that loan. Ryan and the receivers then settled their case, part of which meant the pub had to be sold on the open market, virtually blowing any lingering chance the McPartlands had of keeping it.

They simply couldn’t outbid market competitors, and Dublin pubs were back in vogue. A Galway family of publicans agreed to buy Fallon’s for €756,000 in late 2014, a deal that closed in mid-2015. They only found out the new owners had moved in when they got a text from a customer.

Things became emotionally fraught for the McPartlands, and Seamus says his brain injury worsens with stress.

They were “put out” of their pub, they say, before they could collect all their possessions. They argued in correspondence that some of their possessions, including sentimental items, were sold with their former properties.

The asset sales raised over €1.1 million. They owed banks and Revenue €850,000. It was, the figures suggest, a “positive liquidation”.

Not only is Revenue getting the McPartland’s €250,000 back taxes, it also gets a €129,000 capital gains tax bonus from the pub sale. ACC got paid, as did BoI and the Alliance Taverns creditors.

Any surplus was eaten up with fees for the liquidator, the receivers, the pub management company, the liquidator-receiver legal battle fees and estate agent and consultant fees.

The McPartlands claimed the audited accounts showed they were owed €80,000 in directors loans, but they do not have a “proven claim” and so get nothing. Revenue is still chasing them for the repayment of personal tax allowances from their time as directors of Alliance.

‘They were at the back of the queue’

Revenue, the banks and Grant Thornton all declined to comment in response to highly detailed queries about the McPartlands’ account.

Ryan spoke to defend his actions vigorously and insisted he is “not unsympathetic” to the McPartlands. He highlighted the costs of a liquidation and two receiverships on the business: “They were at the back of the queue,” he acknowledges.

The McPartlands were further aggrieved when The Irish Times informed them the final receivership disbursements have been made to the liquidator by Grant Thornton, which Ryan confirmed. The liquidation closing off, which the McPartlands say is important for their current dealings with Revenue, will happen "in a month or two".

“Imagine hearing that kind of news second hand... again we have no voice,” says Eileen.

Seamus is angry that, as he sees it, his disability was never properly taken into account by Revenue when facilitating negotiations. He is angry that his reputation was brought into question, although he was vindicated in court.

He is upset at the effects over 13 years on his wife and children, and he is upset that, as a publican, the problems obtaining Revenue tax clearance certs caused such obvious damage.

“People on the street think this happened because I bought a load of land, and I didn’t,” he says. “Things happened. We tried our best, and we were vulnerable. Everybody else got to stay behind a process, but we were pushed out front and centre. Don’t get sick or disabled in this country if you own a business.”