The Residence private members' club on Dublin's St Stephen's Green has had court protection removed after a High Court judge refused to appoint an examiner. A receiver was appointed to the company today.
Mr Justice Peter Kelly has also recommended that his judgment, which is highly critical of Missford Ltd and its directors Simon and Christian Stokes, be forwarded to the Director of Corporate Enforcement. He described the directors as 'delinquent'.
He sharply criticised how money was deducted from employees' salaries but was not passed on to Revenue and was instead used as working capital.
Revenue is owed €1.2m in unpaid taxes by the company. The largest creditor, Zurich, which is owed €2.3m, said it would now seek to appoint a receiver to protect its interest.
In his judgment Mr Justice Kelly said it was high time for change so that the misuse of other people's money could not be regarded as working capital by accountants.
The judge said he was highly sceptical of expressions of optimism by an independent accountant that the company could begin to trade profitably in a recession of unprecedented dimensions. He said it ran entirely counter to what was happening in the hospitality trade.
He added that the company had never traded profitably to begin with and the purpose of the legislation governing examinership was not to allow it to begin trading profitably.
He also said that the appointment of an examiner would result in the directors avoiding a full investigation under the Companies Act and that it was not the purpose of the legislation to protect 'delinquent directors'.
Nor, he said, was it to provide directors with a ready form of absolution for corporate wrongdoing. He said the directors had shown scant regard for their obligations under company law to Revenue and employees who had their taxes deducted but never forwarded.
A statement by Christian and Simon Stokes of the Residence said that the business remains open during the receivership and they will work with the receiver to keep the business going.
'Jim Stafford of Friel Stafford Corporate Recovery, who has been appointed receiver, is working with the two of us and our team to operate the club, under his control, while he seeks a purchaser for the business,' the statement said.
The Residence private members' club opened in May 2008 and has 1,450 members. It also has a public bar and night club. It employs 41 people.
