Dublin accountant Mr John McStay was appointed by the High Court yesterday as an interim examiner to Lark Developments Ltd, a development company. The court heard the firm had debts of more than £22 million (€28 million) and had experienced financial difficulties following a £14 million investment in a hotel project.

The company's directors - Mr Anthony Murray of Killeany House, Maynooth, Co Meath and his daughter, Ms Fionna Murray - had asked the court to appoint Mr McStay. The company has its registered offices at Ardfield House, Lucan, Co Dublin.

Mr Lyndon McCann, for Lark, told Ms Justice Carroll that Anglo Irish Bank, a secured creditor, was owed £3.6 million. The Revenue Commissioners are due £2.3 million and unsecured creditors are owed £17 million.

In an affidavit, Mr Murray said Lark began trading in 1979 and recorded after-tax profits of £3.5 million to May 31st, 2000.

Despite the success of its residential, commercial and industrial development, Mr Murray said Lark was now experiencing a cash flow crisis arising from its investment of £14 million in Johnstown House, Enfield, Co Meath. Lark owns 79 per cent of the issued share capital of Johnstown.

Although the hotel was now open for business, it had not been completed because of changes in specifications of the hotel and spa during construction, Mr Murray said. It required further investment to complete the project.

Lark's investment in Johnstown was not readily realisable, he added.

It had expected the costs would be offset by monies generated from the sale of lands beside the M50 at Blanchardstown and the development of lands in Maynooth, together with the sale of Blanchardstown industrial units.

Had these assets been realised on time, Lark could have been in a position to pay creditors, Mr Murray said.

But planning and rezoning difficulties delayed the realisation of these assets, resulting in a cash flow crisis.

Had Lark never invested in Johnstown in the first place - and even allowing for the general downturn in the construction industry - Lark would have continued to be able to pay debts and to trade profitably, he said.

The Johnstown House investment would, in time, be profitable and the appointment of Mr McStay would facilitate implementation of a scheme of arrangement that would facilitate the survival of the company, Mr Murray believed.