Restaurateur Jay Bourke is seeking alternative funds to finance a debt write-off deal after an insurance broker from which he was banking on a windfall stopped taking on new business.
Mr Bourke has asked the High Court to approve a personal insolvency arrangement that would result in a fresh financial start with more than €12 million of his debts being written off.
In his application to the court, it was proposed that the bulk of a debt of €558,000 to Revenue would be repaid from a return on his investment in insurance brokerage XS Direct, which he expected to be floated on the stock market.
He proposed funding his debt deal largely from a payout of €570,000-€750,000 from the expected flotation of XS Direct, valuing the company at €15 million-€20 million. This plan came undone last month after receivers were appointed to the brokerage.
Mr Bourke's personal insolvency practitioner, John O'Callaghan of KPMG, told the court in a submission last October that if the XS Direct "liquidity event" did not happen, then the PIA would fail and Revenue would have the right to seek Mr Bourke's bankruptcy.
Pepper Finance, a creditor owed €12.2 million from a contingent liability arising from Mr Bourke's loans on the Co Meath hotel Bellinter House, which he co-owned, is objecting to the proposal on a number of grounds, including the loss of Mr Bourke's anticipated XS Direct windfall.
Bridge the gap
Mr Bourke’s lawyers have recently written to Pepper Finance saying that the restaurateur was going to seek third-party funds to “bridge the gap”.
Dublin law firm Brady Kilroy, representing Mr Bourke, told Pepper talks were ongoing with Revenue and noted that there was a “very stark reality” for all creditors if Mr Bourke’s proposed insolvency deal was rejected and he was forced into bankruptcy.
Revenue and Pepper would recover none of their debt if Mr Bourke is bankrupted. Pepper would be paid less than 1 per cent of its debt under his proposed insolvency arrangement.
The case came before Mr Justice Mark Sanfey again yesterday, with barrister Keith Farry BL representing the restaurateur. The matter was adjourned until April 4th.
Mr Bourke, who has overall debts of €13.75 million, told The Irish Times last year he was seeking an insolvency deal after his income was “decimated” by Covid-19 restrictions.
The publican –- a well-known figure in Dublin's nightlife scene – has run bars and restaurants including The Globe and Rí Rá, The Front Lounge, Eden Restaurant and Pantibar.
Berlin D2 controversy
Last year his Berlin D2 bar lost its operating licences after video footage circulated on social media showing customers and staff flouting Covid-19 guidelines in summer 2020.
Mr Bourke’s financial adviser thought an initial €80 million flotation valuation of XS Direct, which would have netted the restaurateur a €3 million payout, was “very optimistic”.
The proposed PIA set three years for the flotation to happen. Last month XS Direct said it had ceased accepting new business after its agency deal with Arch Insurance was not renewed.
Mr Bourke’s PIA application said he “played his part in changing the culture of Dublin and elsewhere” by opening LGBT venues that were “deeply involved” in the same-sex marriage referendum. It said that his “endeavours in the restaurant business were equally revolutionary”.