Business made payments to Fianna Fáil candidate and wife as Revenue debts rose

Eddie and Dervla Mulligan’s firm Hype Hair Salon Ltd had tax liabilities of €153,770 in 2014

 

A hair salon business owned by Waterford-based Fianna Fáil councillor and general election candidate Thomas Edward Mulligan and his wife, Dervla, was insolvent from the first year it began operating, according to the Office of the Director of Corporate Enforcement (ODCE).

The business ended up leaving creditors – including the Revenue – out of pocket when it was placed into liquidation almost a decade later.

The company, Hype Hair Salon Ltd, had tax liabilities of €153,770 when it ceased trading in 2014.

Mr Mulligan and his wife, who were equal owners of the business and the company’s sole directors, are now disqualified from operating as company directors until 2024.

Fillings in the Property Registry show Mr Mulligan is associated with a number of property loans, some of which have been taken over by funds that bought loans from Irish banks.

Hype Hair Salon Ltd was incorporated in June 2005 and recorded losses in its first two years of business. In its third year, which ended on June 30th, 2008, the company showed a profit of €19,945. However, by then it had borrowings of €108,120.

The situation deteriorated the following year, when the business recorded a loss of €42,402. The amount owed to creditors rose to €224,213, from €82,754 a year earlier. The directors were owed some €54,000 by the company by then.

The company booked an operating loss of €75,326 in 2010 and was by then dependent on the banks and its two shareholders. The amount owed to the couple increased to €107,750.

The 2010 accounts noted that the company rented premises from a partnership that included Mr Mulligan, and that the rent paid during the year was €162,898.

Rent paid

Total liabilities by the end of 2011 exceeded the company’s assets by €259,222. However, during that year the company made significant payments to the Mulligans – paying back €76,576 of the €107,750 it owed them.

The accounts also recorded that rent of €119,293 was paid to the property partnership that included Mr Mulligan. Meanwhile, the amount owed to Revenue rose to €188,783.

The debt to the Mulligans was further reduced in 2012 to €12,488. The amount owed to Revenue, meanwhile, rose to €208,779.

By this stage, the Bank of Ireland had a charge over the company as well as a personal guarantee (the accounts do not say from whom) for €116,000.

No further accounts were filed. In December 2014 the company went into voluntary liquidation and creditors, at a meeting in the Marina Hotel, Waterford, appointed George Maloney, of Baker Tilly Ryan Glennon, as liquidator.

His final statement of account, produced in December 2017, shows all that was recovered was €4,008 that was in the company’s bank account at the time he was appointed, which went on the cost of the liquidation. There was nothing for the creditors.

A note about the company (which is not named) in the 2017 annual report of the ODCE states that the salon business left a Revenue debt of €153,770 and had paid “other creditors” while being incapable of paying its tax debt.

“The company continued to trade while insolvent. Based on information from the balance sheet, the company was insolvent from when it began trading.”

The note also states that when the company closed, its business was taken over by a “phoenix company”. No further details are given. Phoenix companies are set up to take over a continuing business in an effort to escape debts accumulated when the business had been run by a different company.

The liquidator, according to the ODCE, “reported that queries to the directors were responded to inadequately”. The Mulligans were the company’s only directors.

The history of the company is cited in the annual report because the Mulligans were two out of a small number of people who were restricted by the High Court during 2017 from operating as company directors.

The order against the Mulligans lasts until 2024 and arises from their stewardship of Hype Hair Salon Ltd.

Three salons

A website associated with Hype Hair shows that it operated three salons in Waterford, as well as salons in Tramore and Clonmel.

Mr Mulligan was part-owner of properties used by the salon group on Main Street, Tramore; John Street, Waterford; and 1A Johnstown.

Property Registry files show he and his brother, Andrew, and a third owner, took out a mortgage on 40 John Street in Waterford from the Bank of Ireland in 2004.

The three also mortgaged 1A Johnstown with Bank of Ireland in March 2005. Registry Office files indicate the 1A Johnstown property was sold by a receiver in 2017.

In 2005, the three men bought the property on Main Street, Tramore, using a mortgage from Bank of Ireland, and then leased the property to Hype Hair for 20 years.

The Mulligan brothers are also owners of a property on John’s Street, Waterford. A 2009 mortgage from AIB on this property was transferred late last year to Everyday Finance, a company that bought loans from AIB.

Filings in the Property Registry show that in May 2011 a judgment mortgage was obtained in the Circuit Court against Hype Hair and its directors by a company called Showgrounds Management Company Ltd. Showgrounds operates the Clonmel Shopping Centre, where Hype Hair at one stage had an outlet. A request for a comment from the company met with no response.

The judgment was registered against the couple’s family home in Knockboy, Co Waterford, and also against a property on Tramore Road, Waterford, which was bought by the Mulligans in 2006.

A separate charge was registered in April 2010 against the Knockboy property by the St Dominic Credit Union, of Summerhill, Waterford.

The Knockboy property was purchased in December 2006 with the assistance of a €265,000 mortgage from Irish Nationwide. A second mortgage from Irish Nationwide was registered three years later.

These two loans are now held by Pepper Finance Corporation (Ireland), which has an interest in loans formerly owned by Irish Nationwide. Pepper is seeking a possession order for the candidate’s Knockboy home, and the matter is before the courts.