Popular hotelier and restaurateur Jay Burke is facing bankruptcy after the Supreme Court rejected the insolvency application (PIA) for debt write-off of 12.2 million euros.
The total debt of the businessman, who once had shares in bars and restaurants that employed more than 1,000 people, is 13.7 million euros.
The debt deal, drafted by the arbitrator, has been challenged by its main creditor, Pepper Finance Corporation, which owes about 12.3m euros.
A huge debt comes from Burke’s involvement with Bellinter House, which he co-owned with the late music promoter John Reynolds. Pepper returned only 65,000 euros if the PIA was approved and claimed that the agreement was unfairly harming his interests and that he would make a huge financial profit if Mr. Burke (55 years old) was declared bankrupt.
When the case went to the Supreme Court this morning, Keith Fairey, Burke’s lawyer, John O’Callaghan of the KPMG, said the motion could be rejected.
This means that the bankruptcy filed by Revenue Commissioners against Mr Burke in January can now be considered.
“Revenue commissioners are free to oppose Mr Burke and it looks like they will bankrupt him in due course,” Fari said.
The dismissal is believed to have followed the failure of much of Mr Burke’s plan.
It is rumored that part of the debt, between 570,000 and 750,000 euros, will be repaid from the return of Burke’s investment in the insurance brokerage XS Direct, which he expects to be listed on the stock exchange.
These plans were canceled when the recipients were outsourced in February.
Judge Mark Sanvi agreed to dismiss the application without setting the costs.
The pending issue in this case will be considered later this month.
Niall Ó hUiginn BL, on behalf of Pepper, expressed concern that the proceeds of the debt he was entitled to recover were overpriced by 200,000 euros in the PIA and the court will hear additional information about the case.
The problem is the obvious lack of distinction between debt on favorable terms and not.
Mr Faree said there was potential ambiguity as to how these debts were to be classified and that lessons had been learned in this regard.
He also said that the IRS was willing to repay what it owed, whether it was a debt on favorable terms or not.
Sanvi asked if a trainee could testify in writing.
“I do not think I can let it go,” he said.
“If the lenders on favorable terms are overpriced, this reduces the amount paid to unsecured lenders. “This is a big concern for any unsecured creditor.”
If Burke had acquired the PIA, the deal would have allowed him to maintain the 1, 1.4m family home in Rathmines, south of Dublin.
Bieber also objected, arguing that given the size of his debt, it was not wise for Mr Burke and his wife to keep their house.
Revenue, which according to the PIA owes 558,000 euros, supported the agreement.
Both the tax inspector and Mr Burke’s mortgage lender could be repaid. However, unsecured creditors like Pepper would have faced significant debt.
Mr. Burke has been in bars, restaurants and hotels since 1989, opening Wolfman Jack’s for the first time in Rathmines.
He then opened the Rí Rá nightclub, The Globe Bar, Front Lounge and Eden Restaurant in Dublin, as well as the Bodega and Savoy in Cork, the Garavogue Bar in Sligo and the Café Bar Deli collection.
His debt to income comes from capital gains tax liabilities of about 500,000 euros after he sold the Bodega Bar.
Mr Burke sought to offset those gains by significantly reducing the value of the Bellinter House.
However, his attempt to do so was challenged and he lost an appeal to the Tax Appeals Board and then to the District Court.
Other debts come from small bank loans that he was unable to repay or personal guarantees that he was unable to repay after the 2009 financial crisis.
He claims that his companies were in danger of collapsing because the rents for the properties he was renting were only rising.
In 2017, the Supreme Court suspended him from his position as director of the company for seven years in connection with the liquidation of the former Shebeen Chic pub on South Great George Street in Dublin.
Mr Burke was the manager of Berlin’s D2 bar on Dublin’s Dam Street when he became the subject of controversy in August 2020 over a brunch that violated social distance rules.
The D2 incident in Berlin led the Garda to successfully oppose the renewal of its license.