A judge has raised concerns after Jay Bourke’s (PIP) personal bankruptcy trustee gave the High Court false information when the well-known host and restaurateur sought €12.2million debt relief.
r Bourke’s application for a debt deal was withdrawn last month when a company he had invested in went bankrupt.
He was subsequently declared bankrupt at the request of the Revenue Commissioners.
However, controversy has now arisen over the failed PIA application after it was revealed that the amount of PIP John O’Callaghan’s preferential debt owed to the tax officer had been overstated by KPMG.
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Treasury officials had said they would not support the deal, which covers the bulk of Mr Bourke’s $13.7million total debt.
In an affidavit, Mr O’Callaghan apologized for what he described as a “mistake” on his part.
However, Mr Judge Mark Sanfey said he was taking the matter “very, very seriously” and would render a judgment on it in due course.
“The system is built on trust, and anything that shakes or damages that trust harms the entire personal bankruptcy process as a whole,” the judge said.
A preferential debt is a debt that is given priority over other debts when it comes to repayment.
Pursuant to the PIA filed, Revenue was owed €558,000 in preferential debt, which would be repaid in full under the agreement.
But although he was owed this sum, only 351,000 euros actually had preferential status.
The issue was raised last month by Pepper Finance Corporation, which was behind Revenue in the queue of creditors trying to collect debts from Mr Bourke.
Pepper could have recovered only €65,000 of the €12.3 million he would have been owed had the PIA been approved.
Mr Justice Sanfey asked Mr O’Callaghan, Chair of the Association of Personal Insolvency Practitioners, for an explanation.
In an affidavit, Mr O’Callaghan said the Inland Revenue “actually” told him that the entire debt must be “preferred” “or importation of preferential: paid as in priority and 100 per cent paid”.
He said he had not sought legal advice at the time and his use of the word preference was “incorrect”.
Mr O’Callaghan said what he was trying to outline was “the hoped-for payment of 100 per cent of the tax liability”.
In an affidavit, tax officer Annette Gayson said that at no time did the tax authority state that all of the debt was to be classified as preferential.
Mr Justice Sanfey said he accepted that Mr O’Callaghan “did a very difficult job in an extremely confused situation” on Mr Bourke’s financial affairs and had done his best to get the PIA “over the line”. .
“But I am not satisfied with the explanation he gave in the affidavit,” the judge said.
“Mr. O’Callaghan knows very well what preference means in the context of bankruptcy or personal insolvency. And I have to say, this statement worries me.”
Niall Ó hUiginn BL, for Pepper, said the proceeds were not eligible for full payment of the non-privileged element of the debt.
The lawyer also said he did not accept that it was a speech impediment.
“This was a conscious decision to classify a clearly non-privileged debt as a privileged debt,” he said.
However, Mr O’Callaghan’s lawyer, Keith Farry BL, said the PIP simply misarticulated things and that it “was not intended to mislead anyone”.
He said the PIP learned from the mistake that something like this would not happen again and that the court’s comments would be shared with all practitioners “to ensure that nothing like this happens in any other case.”
Synonymous with the hospitality industry for decades, Mr Bourke (55) opened Wolfman Jack’s restaurant in Rathmines in 1989 and went on to open Rí Rá nightclub, The Globe bar, Front Lounge and Eden restaurant in Dublin, the Bodega and The Savoy in Cork, Bar Garavogue in Sligo and the Café Bar Deli group.
Most of his debt arose from his interest in Bellinter House, the Co Meath Hotel, which he co-owned with the late music promoter John Reynolds.
https://www.independent.ie/irish-news/courts/judge-in-jay-bourkes-137m-insolvency-case-concerned-after-incorrect-information-given-to-court-41655217.html Judges affected in Jay Bourke’s €13.7million bankruptcy case after false information was given to court