Judge removes liquidator of Co Kildare hotel

A liquidator to a Co Kildare hotel has been removed over what a High Court judge said was his "flawed understanding" of his role. The Revenue Commissioners had sought the removal of Anthony J Fitzpatrick as liquidator of Ballyrider Ltd, owners of the Hazel Hotel in Monasterevin, following a voluntary winding up in November 2010.

The company's main creditor AIB was owed €237,000. The Revenue were also a preferential creditor.

Revenue had concerns about the way Mr Fitzpatrick had handled the liquidation, particularly in relation to his remuneration, fees paid to solicitors and other costs.

It asked the High Court to remove Mr Fitzpatrick and also sought an order that Mr Fitzpatrick refrain from continuing a legal action against a prospective purchaser of the hotel who failed to complete the deal.

The court heard the prospective purchaser agreed in May 2011 to buy the hotel for €630,000, put down a deposit of €34,000, but failed to complete the purchase. It was sold the following November for €479,000. Along with the deposit from the failed first sale, there was €503,000 available.

AIB’s debt was paid off and €166,000 was transferred to the liquidator, who after fees and costs, had about €73,000 in the liquidation fund. The Revenue took issue with the fees and costs and sought the removal of the liquidator, who opposed the application.

Ms Justice Deirdre Murphy ruled the Revenue had discharged the burden of proof showing the best interests of the liquidation required Mr Fitzpatrick's removal.

Had Mr Fitzpatrick come before the court with a detailed set of accounts, the court would probably have been slow to intervene, she said. “The evidence suggests he has a flawed understanding of the role and duties of a liquidator,” she said.

Earlier, the judge said the liquidation was “still trundling along with no end in sight” 3½ years after it started, and to the detriment of creditors. The primary cause of this was Mr Fitzpatrick’s decision to sue the first prospective buyer for non-performance of the contract and without carrying out a proper assessment as to whether that purchaser was a mark for damages.

He had also done so without consulting the committee of inspection, set up at a creditors’ meeting, following liquidation. Part of the problem undoubtedly resulted from the liquidator’s “poor choices” of legal advisers, she said.

“Not one, not two, but three solicitors retained by him in the course of the liquidation have been struck off,” she said.

He paid €45,000 to one of those solicitors for conveyancing services which the court considered “to be excessive by any yardstick”.

The court was told Mr Fitzpatrick had sought some €79,000 for his own fees.

Yet, the judge said, 3½ years into the liquidation he had not produced an itemised account showing the work he had done which could be assessed by the committee of inspection.

The judge also said that if the Revenue had exercised its rights as a member of the committee of inspection “more vigorously from the outset”, some, if not all, of the difficulties might have been avoided.