Hot Press in court over Hall of FameTuesday 09 October 2007 17.17
The editor of magazine 'Hot Press' Niall Stokes has begun a High Court action against millionaires music promoter Denis Desmond and Riverdance duo Moya Doherty and John McColgan over a liability for €1.5m
losses for the company which ran the Hot Press Music Hall of Fame museum in Dublin.
The court heard that the 55 year old father of two founded Hot Press in 1977 and the music magazine now employs 22 people and has a circulation
But the failure of the Hot Press Music Hall of Fame, which was badly hit by the September 11th terrorist attacks in New York in 2001, left Mr Stokes in a position where he was offered £800,000 Irish pounds (€1m) for his shares in Hall of Fame by Denis Desmond and Mc Colgan and Doherty.
But Mr Stokes is claiming that five other people have a liability for losses incurred by the Hall of Fame, now estimated at €1.5m.
The action by Mr Stokes and his wife Marian Sheehy, of Trinity Street, Dublin, is against five people, including John MacColgan and Moya Doherty; Cyril O'Brien, of Knockabbey Castle, Co Louth; Tony Burke of Lambourne Wood, Cabinteely, Dublin; and Denis Desmond of Strand Road, Killiney.
Mr Stokes and Ms Sheehy were the sole directors of Steeple Investments of James Place East, Dublin and claim they were engaged from 1998 in a business venture with Mr O'Brien and Mr Burke to obtain investment in Steeple through a business expansion scheme (BES) in order to develop and operate the Hall of Fame Museum.
Steeple was given a licence to develop and operate the museum at Middle Abbey Street, Dublin and did so from 1998 onwards.
It is claimed that, on November 18th, 1998, Mr O'Brien and Mr Burke agreed to indemnify Mr Stokes and Ms Sheehy against two thirds of any liabilities, costs or losses arising out of the Stokes/Sheehy shareholding in Steeple and the BES scheme.
It is alleged that, on March 17th, 1999 Denis Desmond agreed to participate in the venture and that John McColgan and Moya Doherty agreed to participate in February 2000. Mr Desmond, Mr McColgan and Ms Doherty agreed to indemnify Mr Stokes and Ms Sheehy against any liabilities or losses, it is contended.
In the development and operation of the museum, Steeple suffered significant loss and damage and the value of Mr Stokes and Ms Sheehy shareholding was diminished, it is claimed. The losses calculated were in the region of €1.5m and there were substantial cost overruns. There were higher than anticipated operating costs and failure to achieve sales targets.
Mr O'Brien, Mr Burke and Mr Desmond are liable for the bulk of the losses alleged while Mr McColgan and Ms Doherty are liable for over €158,000, it is claimed.
The defendants deny there was the loss or damage alleged. Mr MacColgan and Ms Doherty deny they agreed to participate in the venture as alleged
or that they agreed to indemnify Mr Stokes and Ms Sheehy against losses.
Opening the case Mr Hugh Mohan SC, for Mr Stokes and Ms Sheehy, said that Mr Stokes developed the idea of the music museum and approached Cyril O' Brien about a premises in Middle Abbey St. Mr O' Brien was
interested in the idea and through a third party they were introduced to a promoter Mr Tony Burke and a company, Artwave, was set up to using the
BES scheme to run the museum, a venue and restaurant and bar.
Finance was put in place in 1998 and at a meeting at Fitzpatrick's Killiney Castle Hotel on St Patrick's Day, 1999, Denis Desmond agreed to join the project. Mr Mohan said that Tony Burke and Cyril O' Brien had
agreed on indemnity against loss as a comfort to Mr Stokes and Ms Sheehy in the event of the venture failing and this indemnity agreement remained in place when Mr Desmond signed up.
The Hall of Fame finally opened in May 1999 and it soon became apparent that it wasn't doing as well as had been expected.
'The numbers were not there. There were a number of personality issues which started to surface among the business management team. They started to simmer and come to the surface,' Mr Mohan said.
He said that in September 1999 Mr Cyril O' Brien was allowed to exit from his involvement but there was no mention of him exiting the indemnity arrangement.
He said that extra investors were sought and in
2000 John Mc Colgan and Moya Doherty of Riverdance fame who knew Niall
Stokes decided to become 20 per cent shareholders.
But trading at the Hall fo Fame did not get any healthier and at a meeting in Jury's Hotel in Ballsbridge in February 2001 attended by Mr Desmond, Mr Stokes, Mr Burke, Mr Mc Colgan and a number of Mr Desmond's
advisers it became clear that Mr Desmond wanted to take over the operation and change it.
Mr Stokes was offered a total of £800,000 Irish pounds (€1m) but no mention was made of creditors or of the BES investors and there was no time span given for the payment to Mr Stokes.
It was proposed that Mr Desmond would own 85% of of the new company and Mc Colgan and Doherty 15%.
Mr Mohan said that Mr Desmond took over the running of the premises from March 2001.
He said that the Hall of Fame was affected by the September 11th attacks and ceased trading in September of that year.