FALLON&BYRNE, the award-winning restaurant and gourmet food hall on Exchequer Street, Dublin, is insolvent and unable to pay a €1.4 million tax bill, the High Court has been told.
Mr Justice George Birmingham granted the company, which still has a sales turnover of more than €8 million, protection of the court by appointing Neil Hughes of Hughes&Blake, chartered accountants, as interim examiner to run the business as a going concern.
Gary McCarthy SC told the court yesterday that while the company was still making a profit on an €8 million sales turnover, it had found itself unable to meet its historic and current tax liabilities.
He said the Revenue Commissioners had served a petition to wind up the company but the directors felt there still were strong prospects of it surviving under examinership.
Mr McCarthy said its problems arose mainly from a decision of directors Paul Byrne and Fiona McHugh to concentrate on front- of-house duties while leaving financial administration to an under-qualified bookkeeper who was a member of Mr Byrne’s family.
Unknown to the directors, substantial arrears of taxes in the region of €840,000 had been allowed to build up despite relevant returns having been made to the Revenue Commissioners. Revenue eventually issued letters of demand and ultimately a petition to wind up the company.
Mr McCarthy said the ability of the financial administrator to mask such a significant tax liability from the directors was a fundamental weakness in the systems the directors had put in place when the company was set up in 2006.
Fallon&Byrne had called in accountants Delaney, Locke and Thorpe to represent it during an audit and discovered a number of inaccuracies and discrepancies. It had found that the financial administrator had misappropriated company funds of at least €223,000 over a number of years.
Mr McCarthy said an instalment plan to pay off its historic tax debts had been agreed with the Revenue but in so doing, the company had fallen behind with its current tax payments.
He told Mr Justice Birmingham that the company had suffered due to the recession since 2008 and turnover had fallen from €11 million over the last number of years, but had levelled off at just over €8 million.
Last year’s bad Christmas weather had been devastating. Many functions and restaurant bookings had been cancelled, lunch trade had fallen away and Christmas gift purchases were significantly down because consumers had been unable to travel to the city.
Mr McCarthy said the downturn, together with other businesses going into examinership and the receivership in Superquinn, had led to a tightening of supplier credit. As a result of its difficulties with the Revenue, it had been unable to get a tax clearance certificate which was necessary to renew its drinks sales licence.
Mr Justice Birmingham adjourned proceedings until January 12th.