Restaurateur Jay Bourke has been declared bankrupt by the High Court on the back of an application by the Revenue Commissioners over a tax debt of €558,000.
Mr Bourke (55) tried to secure a debt write-off plan, known as a personal insolvency arrangement, to reduce the bulk of his €13.7 million in debts but this was withdrawn earlier this month after one of his creditors, Pepper Finance, which is owed €12.2 million, objected.
Pepper's debt related to a contingent liability arising from loans drawn from Bank of Scotland (Ireland) for the renovation of Bellinter House, the Co Meath hotel he co-owned.
Mr Bourke had claimed that this debt was a contingent liability and had been paid in a full and final settlement with the €3 million sale of Bellinter House in 2016.
A well-known figure on Dublin's nightlife scene, Mr Bourke operated popular bars and restaurants including The Globe and Rí Rá, Panti Bar, Eden Restaurant and Cafe Bar Deli.
It is understood Mr Bourke consented to the Revenue’s bankruptcy petition. He declined to comment when contacted by The Irish Times.
The High Court heard on Monday that his tax debt dated back to the Celtic Tiger years.
He sold The Bodega pub in Cork generating a capital gains tax liability of about €500,000. He attempted to offset the gain against the decline in the value of other assets that he owned.
He had substantial losses arising from the fall in value of Bellinter House which he attempted to offset agains the capital gain on The Bodega but this was rejected by the courts after he appealed the tax liability.
The Revenue later petitioned the High Court to have him adjudicated a bankrupt over the outstanding tax debt.
This led the restaurateur to seek a protective certificate from the courts, adjourning the bankruptcy application and allowing him to seek protection from his creditors so he could devise a personal insolvency arrangement to address his financial difficulties while avoiding bankruptcy.
The bulk of Mr Bourke’s debts relate to Bellinter House loans, smaller bank loans he was unable to pay off and personal guarantees he could not honour due to the 2008-09 economic crash.
Attempts to negotiate a deal with the Revenue after the withdrawal of the personal insolvency arrangement failed, resulting in the Revenue making the fresh bankruptcy petition yesterday.
Revenue had supported Mr Bourke’s proposed personal insolvency arrangement.
“In the end, the gap was too far,” said a source familiar with Mr Bourke’s debts.
Mr Bourke’s hopes of a windfall payout of €570,000 to €750,000 from the flotation of insurance broker XS Direct to fund the personal insolvency arrangement were dashed when the brokerage entered receivership in February.
During his application for the personal insolvency arrangement, Pepper Finance also objected to the the Revenue’s €558,000 being treated entirely as preferential debt to be paid in full.
Counsel for the lender had told the court that the preferential element of the debt had been overstated by some €200,000 giving Mr Bourke’s other creditors an impression that Revenue was legally entitled to be repaid in full.
Mr Bourke told The Irish Times last November when he applied for the personal insolvency arrangement that his income had been “decimated” because of the restrictions imposed on bars and restaurants during the pandemic.
According to estimates in his own proposed personal insolvency arrangement, Mr Bourke’s creditors will receive just 0.01 per cent of what they are owed from the one-year bankruptcy compared with 0.5 per cent of what they would have received under the now-abandoned personal insolvency arrangement.
The bankruptcy fees are estimated to amount to just over €100,000.
