Examiner appointed to hotel firm
The High Court has confirmed the appointment of an examiner to the company which owns the five-star Ritz Carlton Hotel in the Powerscourt Estate in Co Wicklow. The hotel has 293 employees, including 155 full time staff.
Ms Justice Mary Finlay Geoghegan said, despite the "highly unusual" factual situation, she was satisfied on the evidence CarryLane Ltd had a reasonable prospect of survival if certain conditions are met and she confirmed Declan Taite as examiner.
That evidence included the Ritz Carlton Hotel Company BV (RCHC), operator of the hotel and part of the international Marriott Group, is prepared to invest in it.
Bernard Dunleavy for RCHC said, if the RCHC investment was accepted, it would ensure that Carrylane, which owes the National Asset Management Agency €47 million, would not be saddled with unviable debt costs. RCHC would ensure the debt would be addressed and was also providing a safety net for operating costs for as long as it was involved in this process, he said.
Rossa Fanning, for the company, said there was no opposition to the application to confirm Mr Taite's appointment.
Andrew Fitzpatrick, for the examiner, said Mr Taite was not just speaking to RCHC but had received a number of expressions of interests from other potential investors. Since Mr Taite was appointed interim examienr, there was no reduction in the company's trading turnover, he added.
Mr Taite was recommending, in order to allay any concerns, any deposits taken for weddings and other events during the examinership perood would be ring-fenced in a separate account so they could be returned if the need arose, counsel said.
In her decision today, the judge said the highly unusual factual situation included the "complex and fractured" ownership structure of the hotel and the apparent improbability Carrylane would be trading profitably in the period immediately after examinership.
She said RCHC, part of a "very significant" international hotel group, is operating the hotel and is in negotiations with Nama aimed at putting in place arrangements to support the hotel for a reasonable period post-examinerhsip until it may be able to "turn a corner".
There was also support for examinership from other relevant parties while Wicklow County Council, owed very significant rates, and the Revenue Commissioners were neutral, the judge noted.
A very important aspect of the 1990 Companies Amendment Act provided for proteciton of employees of companies going through a very difficult period and this company employs 293 people and is a very signficiant employer in Co Wicklow, she added.
In those and other circumstances, she would confirm Mr Taite's appointment and wished the parties good luck in seeking to meet "a very difficult challenge".
Earlier, Mr Fanning said Mr Taite had in an interim report expressed the view the necessary conditions for the company's survival could be met. The cash flow projections during examinerhsip would cover trade creditors and payment of employees and it was especially important key staff were remaining with the hotel as this was a five-star operation.
If the company was wound up, there would be nothing for unsecured creditors, counsel added.
The hotel's financial performance has never been good since it opened at a poor time in 2007 but its operating losses had narrowed signficantly to a point where it was close to breaking even, he said. Occupation levels had increased but, due to the costs of serving bank debt and rents due, it had a €5 million trading loss for the ten months to October 2012.
The hotel's complex ownership structure arises from various tax breaks. It has five categories of owners who have various entitlements, incuding for rent. Nama has security over 120 of the 200 suites.
The Powerscourt Estate gets some €400,000 a year annual rent as the freehold owner of the land on which the hotel is built.
Treasury Holdings, now in liquidation, is the ultimate controlling shareholder in Carrylane. The petition for examinership was brought by the directors of Carrylane, Treasury co-founder John Ronan and businessman Dermod Dwyer. The liquidators supported the petition.