DEUTSCHE BANK IS owed nearly €700 million by a group of companies controlled by Galway maths teacher turned developer Gerry Barrett, the High Court has heard.
Last month seven companies that form part of the Edward Capital Group were granted the protection of the High Court after the bank appointed a receiver over the firms, which employ more than 330 full-time and part-time staff.
Insolvency Practioner Neil Hughes of Baker Tily Hughes Blake was appointed interim examiner over the firms, the assets of which include the 4-star Meyrick Hotel, the 5-star G Hotel and the Eye Cinema – all of which are in Galway.
They also hold various property assets including 38 apartments, a retail park, a house and sites in the Galway area.
The total value of the seven firm’s assets has been estimated at between €55 million and €60 million. The companies sought the appointment of the examiner as the companies were insolvent and unable to pay their debts as they fall due.
The companies, whose directors are Barrett and his wife, Catherine Barrett, of Drimbawn House Chestnut Lane, Lower Dangan, Galway, accept the group is “very significantly indebted” to the bank to the tune of €698 million.
While the companies can service a certain level of debt, they say a large amount of what is owed can never be repaid. The companies’ loan portfolio had been acquired by Nama but was sold for an undisclosed sum to Deutsche Bank in 2015.
Since then, the group has sold assets it held and refinanced some of the debt owed to the bank. It has also engaged with the bank’s representatives with a view to coming to an arrangement over the debts, including the disposal of assets.
No agreement was reached and last month the bank issued a letter demanding full repayment of what it claims is due and owing. The bank then proceeded to appoint a receiver over the seven companies.
This resulted in the companies coming to the High Court and seeking the appointment of Hughes as interim examiner.
Barrett’s main company, Edward Holdings, sold another of its assets, the D Hotel in Drogheda, earlier this year.
The developer managed to hang onto the ‘Bonham Docks’ site overlooking Galway Bay and he plans to build a landmark, €100 million office and commercial complex on the property.
Chance for survival
The companies argued in the High Court that while they are insolvent they have a good prospect of survival if certain steps are taken. Their position is supported by an independent expert’s report.
The companies claim their trade has improved since 2014 and their underlying trade is profitable, but the key problem being that they cannot service the level of debt owed to the bank by the group.
There has also been extensive discussions with a third party interested in investing in the group. It was also argued that the creditors and the employees would do a lot better in an examinership rather than if the companies are wound up.
The companies also submitted that the confirmation of an examiner would being certainty to the employees positions.
The examiner has up to 100 days to put together a scheme of arrangement which, if approved by the firms’ creditors and the High Court, will allow the companies continue to trade as going concerns.
The matter returned before the High Court on Friday when Mr Justice Henry Abbott approved the payment of a number of minor pre-petition debts. There were no objections to the application. The Judge adjourned the matter to a date later this month.
Additional reporting Peter Bodkin