A provisional liquidator has been appointed to EI Air Exports by the High Court after the Revenue Commissioners claimed the company owes them £706,000. The company, which is based at Dublin Airport and employs 70 people, operates an air passenger service between Dublin and Donegal. It is involved in charter business and carrying freight. The Revenue authorities told the court they were unwilling to accept a proposal to sell the assets of the company to a new company ahead of liquidation.
In an affidavit, Mr Martin Lyons, deputy collector general of the Revenue Commissioners, said the company first came to the attention of the Collector General in mid-1996, when there were arrears of £350,000 in respect of outstanding taxes.
The company failed to comply with an agreed instalment arrangement. Early last year the company began to pay taxes as they fell due and made arrangements for repayment of outstanding amounts. The Collector General agreed to that approach. Throughout 1997 current taxes of about £400,000 were repaid, together with £60,000 off the arrears. The company failed, however, to comply with the agreement in relation to payment of current taxes.
The management accounts showed that net liabilities of the company were £1,762,977, excluding the value of fixed assets which, if sold, would leave a deficit of £1,728,366. He believed the company was insolvent.
Mr Lyons said a letter to the Collector General, dated February 4th, from the company's adviser, Mr Charles Glass, chartered accountant, of Clonmel, had advised that it was the company's intention to sell its assets to a new company, Ireland Airways Ltd, ahead of liquidation.
Mr Lyons said that while the letter indicated the assets would be sold at a fair value, he had been advised this suggested approach would not result in the best value being obtained.
Mr Glass told the Collector General that Irish Airways Ltd would have as a shareholder Mr Ruadhan Neeson, Emerald Mews, Upper Grand Canal Street, Dublin, who was currently a shareholder director and secretary of EI Air Exports. Mr Lyons said no value had been placed on the goodwill, client base or charter contracts of the company. If any sale of assets was to take place, it should be carried out by an independent person.
Notwithstanding current liabilities, the company continued to trade and, as a consequence, was incurring a debt in relation to PAYE/PRSI of about £7,000 per week together with a further £7,000 per week in respect of VAT.
The set of management accounts showed net liabilities of about £1.7 million and a total asset base of about £300,000, which included £45,000 due in payments later this month from the Department of Public Enterprise.
Mr Lyons said what was proposed in Mr Glass's letter amounted to the transfer of assets of the company to a company with which both Mr Glass and Mr Neeson had an interest.
In his letter, Mr Glass said additional price increases had been negotiated with customers and increased utilisation of aircraft was achievable by altering routes and schedules. The new company, Ireland Airways Ltd, had had discussions with officials of the Department of Public Enterprise with a view to obtaining an operating licence.
This was being done so that if EI Air Exports ceased trading, the business would not be destroyed, 70 jobs would be preserved, and as much of the remaining asset value as possible would be retained for the benefit of the liquidator of EI Air Freight.