AN EXAMINER has been appointed to a company employing 195 people in Dublin and Galway which provides cleaning services to private hospitals and State bodies.
The directors of Neylon Maintenance Services Ltd claim that financial mismanagement, including false invoicing, falsification of accounts, falsification of a tax-clearance certificate and substantial underdeclaration of tax liabilities by its financial director Pádraic Faherty, resulted in or exacerbated a decline in profitability from 2009 and led to a Revenue debt of almost €1 million.
It was claimed that Mr Faherty told director Sylvester Neylon a €224,000 profit was made in 2009 when in fact a loss of more than €400,000 was incurred.
The petition for examinership arose from the company being insolvent due to the “misbehaviour” of Mr Faherty, a member of the Association of Chartered Certified Accountants, Mr Justice Peter Kelly noted. Mr Faherty had been dismissed following failure to live up to his obligations.
After hearing the company is now trading profitably and that its interim examiner Neil Hughes is confident of putting together a survival scheme, the judge said he was satisfied to confirm Mr Hughes as examiner.
On a going-concern basis, there was a deficiency of assets over liabilities of €816,569 which would increase to some €1.7 million on a winding up, he noted.
The firm, with branches in Dublin and Loughrea, Co Galway, is the largest Irish-owned supplier of cleaning and maintenance services to the private hospital sectors and has several State clients, including the Revenue.
Examinership would be beneficial for most creditors and none opposed the petition. The Revenue was neutral and he was satisfied examinership was appropriate especially from the point of view of the employees, Mr Justice Kelly said.
Earlier, Declan Murphy, for Neylon, said the Revenue liability of almost €1 million related to 2008- 2010 but the company was now trading profitably and taxes were being paid. The “unfortunate events” experienced stemmed from Mr Faherty’s period as the company’s accountant but the directors had shown a willingness to deal with the issues raised.
In the petition, the company said Mr Neylon was shocked in June 2010 when AIB Commercial Services (AIBCS) contacted him about a serious problem with false invoices and proposed to withdraw the invoice discounting service being provided by the bank.
The company said Mr Neylon raised the matter with Mr Faherty who initially denied false invoicing had occurred before admitting some days later that he had raised a number of false invoices but that it was an isolated incident
In early September 2010, AIBCS told Mr Neylon it felt he did not appreciate the extent of the actions of Mr Faherty relating to false invoices and gave Mr Neylon a copy of the company’s debtors ledger provided to the bank.
Mr Neylon, on review of the ledger, knew it was overstated, the company said. On finding Mr Faherty had “lied” to him, Mr Neylon immediately contacted another firm of accountants and asked them to review the accounts.
