Interim examiners appointed to restaurant operators

The High Court has appointed an interim examiner to several related companies that operate a number of restaurants in Limerick and Cork with more than 200 employees.

The application for the protection of the courts was made in relation to firms behind the award-winning Cornstore Restaurants in Cork and Limerick.

The applicants also operate the Coqbull restaurants, which are based in Limerick, Castletroy and Cork.

The application to appoint an examiner was made after the group’s main creditors (Swedish-based Proventus Capital Partners III KB fund) appointed receivers over certain assets of businesses after its demand for payment of approximately €26.74 million of the related companies debts was not made.

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The companies seeking the appointment of an examiner are Keep it Real Holdings DAC, Rosewalk Ltd, Coal Quay Restaurants Ltd, Winstore Restaurants Ltd, Burgerchick Cork Limited, Burgerchick Limerick Ltd and Burgerchick Casteltroy Limited.

The court heard the companies had been controlled by husband and wife Patrick and Linda Frawley, who are well known in the hospitality sector.

On Tuesday evening, Ms Justice Eileen Roberts said she was satisfied to appoint insolvency practioner Joesph Walsh, of JW Accountants, as interim examiner to the companies.

The judge said that it was accepted that the companies are currently insolvent and unable to pay their debts.

Marylebone Taverns Limited, which is a company owned by Mr Frawley, petitioned the court seeking to have an examiner appointed to the seven companies.

Ross Gorman BL, for Marylebone, said that despite the firms difficulties an independent expert’s report, compiled by Cormac Mohan, of FM Accountants, stated that the businesses have a reasonable prospect of survival as a going concern if certain steps are taken.

In his report, Mr Mohan said the appointment of an examiner who would put together a scheme of arrangement with the creditors could see the businesses, which have been running for a long number of years and have been largely profitable and are well-run, survive as going concerns.

Counsel said Mr Mohan had also stated in his report that the companies will need additional investment.

Counsel said there has already been one expression of interest from a potential investor who has a long track record in the Irish hospitality sector.

Mr Gorman told the court that the source of the companies‘ difficulties was the performance of other related companies in the group based in the UK.

Counsel said the group had entered into an arrangement with the Swedish-based fund to re-finance loans it had taken out for purposes including acquiring businesses in the UK.

Counsel said the group’s restaurants were badly hit by Covid-19.

The UK companies, which are not seeking the protection of the courts, fared worst of all during the pandemic, counsel said.

This was due to the fact the government supports in Ireland for businesses were far better than those on offer in the UK, he said.

The group’s Irish businesses have been generally profitable and were trying to service the debt of the related UK restaurants.

Counsel said the group has not been able to service the debt owed to the fund since December of 2022, and it was accepted that the entities were in default of the repayment obligations.

The parties had been working with each other to try and resolve the issues between them.

However earlier this month the fund sought repayments of £19 million (¢21.8 million) and €4.9 million.

When this was not paid the fund appointed joint receivers over the shares of some of the companies seeking protection.

The joint receivers, who were put in place last Friday, also appointed new directors and secretaries to those companies, counsel said

While the restaurants continue to trade the change of operators of the companies was of concern to his clients.

As a result, counsel said, his side was seeking Mr Walsh’s appointment, on an ex parte basis, as well as orders requiring the joint receivers to cease acting and to hand back and books, records relating to the firms.

Ms Justice Roberts said that she was prepared to appoint Mr Walsh on an interim basis.

However, the court was not prepared to make orders against the receivers at this stage of the proceedings.

The matter was adjourned to a date later this month, but she said the applicant could return to court before then should the need arise