Dublin Daily faces large deficit as its biggest shareholder disputes its liability to the company. Dublin Daily News Ltd's biggest shareholder is disputing a €500,000 liability to the company. Directors of the failed newspaper said yesterday they calculated its liabilities at €1.67 million, and told unsecured creditors they were facing a shortfall of €453,857.
But its biggest backer, British newspaper group Archant, is refusing to pay €496,390 which the directors maintain it owes as part of its original investment.
Addressing a creditors' meeting, editor and director Mr Liam Hayes said: "Archant is disputing this liability. This is a legal issue and will be a matter for our legal advisers to address."
Archant held a 20 per cent or €1.5 million stake in the paper. It paid for this with €1 million in cash and agreed to provide up to €500,000 in services. This is the part of the deal under dispute. The British company refused to comment on the issue yesterday.
Dublin Daily News Ltd's statement of affairs shows that the disputed liability is the liquidated company's single biggest realisable asset. It amounts to almost half the €1.2 million which the statement estimates could be realised from the liquidation.
The company, which published the shortlived Dublin Daily News/Dublin Evening title, held its creditors' meeting in the Airport Regency Hotel on Dublin's northside yesterday. The meeting appointed Mr George Maloney of accountants Baker Tilly O'Hare as liquidator.
According to its statement of affairs, preferential creditors are owed €276,428, while unsecured creditors are due €1.39 million. The company estimates the shortfall at €453,857. However, a number of unsecured creditors disputed the directors' figures. Mr Mark Beggs, managing director of Doherty Advertising, said his company was owed €297,000, which was €100,000 higher than the €196,064 estimate in the statement of affairs.
Ms Robin O'Reilly, the paper's social diarist, said she was owed €13,984, and not €10,984 as estimated on the statement of affairs. A representative of photographic agency Photocall said the statement underestimated the amount that Dublin Daily News owed that company.
At one point, Mr Beggs called for the meeting to be adjourned, asking the directors to restate the company's liability to his business. Mr Hayes said the figures were the directors' calculations based on invoices up to July 17th.
On the preferential list, the company's 43 employees are owed €169,493 and Dublin City Council is owed €8,553 in rates. The Revenue Commissioners is owed €98,382, but the company is due a VAT repayment of more than €175,000. The employees will get their entitlements from the Government's social insurance fund.
Doherty Advertising is listed as the largest unsecured creditor, followed by distributors Easons with €157,949, printer Meath Chronicle Ltd with €140,857, and AIB Finance and Leasing with €100,658.
Mr Hayes said the board opted to wind up the company at the end of a "critical" period between June 20th and July 8th. During those weeks, it sought a €1.5 million investment from its shareholders, including Archant, which refused to put more money into the business. Between September 2002 and its launch in March, it raised €4.2 million.After the meeting, Mr Hayes said he believed there was a market for a metropolitan newspaper serving the greater Dublin area.
The meeting appointed a committee of inspection that included Mr Martin Fitzpatrick, chairman of the Dublin branch of the National Union of Journalists (NUJ), and Ms Dympna McHugh of Creative Solutions. Mr Séamus Dooley, NUJ general secretary for Ireland, said he hoped Archant would do the "honourable thing" and meet its liability.
