I got this report from a creditor's proxy who attened the meeting.
Meeting of the Creditors of
Power Holiday Management Limited (trading as Self-Catering Ireland and selfcatering.ie)
Held on 8 August 2012 at 12:00pm
at Rhu Glenn Hotel, Sleiverue, Co. Kilkenny
Tom Murran, of Peter O’Connor & Son Solicitors Waterford, opened the meeting and explained that Power Hotel Management Limited trading as Self-Catering Ireland and selfcatering.ie (“the Company”) was placed in liquidation at a meeting of its members held earlier that day and that David Breen of David Breen & Co Chartered Accountants, Waterford was provisionally appointed liquidator by the shareholders pending the meeting of creditors.
Mr. Murran introduced Mary Power as a director of the Company and chairman of the meeting.
Ms. Power read a statement outlining the history of the Company with the principal points being:
· The Company commenced trade in May 1988 managing 9 holiday properties in Ireland.
· Over the next three years the Company expanded to 700 hotels and 3,000 holiday homes. The Company stopped managing properties and concentrated on bookings.
· In 2008 the Company achieved its peak turnover of €1.7m and invested heavily in its online operations.
· During 2009 – 2011 the Company suffered declines in turnover and margin and in 2011the company made redundancies and returned a small profit of €25k.
· Since 2011 credit terms were tightened by suppliers.
· The directors personally invested in excess of €500k in the business and have personally guaranteed the Company’s bank loans.
· Ms. Power apologised to creditors for the losses incurred.
Ms. Power then asked the creditors for questions arising out of the statement of affairs which had been circulated. There were a number of questions out of which the following points arose:
· Ms Power could not account for the reduction of debtors receivable by the Company from €154,728 in the last set of filed accounts (December 2010) to €7,335 as at 7 August 2012. It was put to Ms Power that as a director of the Company she had a duty to know what had happened to the largest asset of the Company. It was agreed that the liquidator would investigate where the proceeds received from debtors had gone and whether there remained any debtors outstanding.
· Ms Power asserted that her best estimate of the value of the software and domain name of the business was €5,000. She acknowledged that the development costs of the software was in the order of €500,000. It was agreed that the liquidator would seek to maximise the value of this asset in open market sale.
· Ms Power claimed that her new business Just Go Limited trading as justgo.ie (“Just Go”) had no relationship with the Company. She then clarified after questioning that Just Go loaned money to the Company to fund losses during 2011 and 2012. Ms Power also acknowledged after further questioning that some of the customer deposits received by bank transfer were received into Just Go’s bank account. Customers believed they were paying into the bank account of Power Holiday Management Limited trading as Self-Catering Ireland. Ms Power stated that any money’s received by Just Go were transferred to the Company. The point was made from the floor that customers that paid money to Just Go would be creditors of Just Go rather than of the Company and would be due a refund from Just Go. It was agreed that the liquidator would investigate all transactions between the Company and Just Go.
· Ms Power claimed that Just Go did not benefit from the Company’s software development and had its own system. It was pointed out from the floor that Just Go did not report any software development costs in its accounts in contrast to the Company which reported software development costs in the region of €500k. It was agreed that the liquidator would investigate whether Just Go was using any of the software or intellectual property of the Company and that it if so Just Go would be charged market rates for such usage.
· Ms Power acknowledged that she received rent from the company for use of its premises and that Just Go operated from the same premises.
· It was put to the chairman from the floor that Just Go appeared to be a classic phoenix operation and that this should be investigated fully be the liquidator.
· It was pointed out from the floor that there appeared to be a pattern in the weeks leading up to the Company’s closure of customers being approached for accelerated payment and that payment would only be accepted in the form of cheque or credit transfer rather than credit card. Ms Power denied this but the overwhelming response from the floor was that individuals were called seeking payment by cheque or transfer in order to avoid losing their holiday booking. One creditor claimed to have paid 2 hours before the e mail was sent announcing the closure of the business. It was agreed that the liquidator would investigate for evidence of such practice. Some of the creditors present questioned whether such practice amounted to fraud.
· It was put to the chairman that she knew or ought to have known that the company was insolvent for a number of years (questions were asked on accounts filed for 2008, 2009 and 2010 all of which showed liabilities in excess of assets) and yet she continued to trade, taking customer deposits. The chairman was asked why did she allow this to happen and replied that she believed she could continue to fund the business through personal and borrowed funds and that with hindsight she should have ceased trade two years earlier.
· The chairman was asked why did she not place customer receipts in a ring-fenced bank account when she knew the business was insolvent. She replied that this had not occurred to her and that she thought that the Company could trade out of its difficulties.
· A significant number of suppliers (owners of holiday homes/hotels) claimed that the creditor balances included in the statement of affairs were inaccurate and that they were owed materially more than the amounts included.
· It was proposed and seconded that the meeting be adjourned to allow the directors prepare an accurate statement of affairs. It was pointed out from the floor that the errors were critically important as full quantification of the creditor balances could result in a position where the directors represented less than 50% of creditors. The motion was put to a vote and all creditors present voted in favour of an adjournment except for Ms Power. As Ms Power represented a majority of creditors per the statement of affairs presented to the meeting, the motion was defeated. Mr Murran pointed out that the majority of proxies returned had appointed the chairman to vote in their place. As Ms Power represented a majority of creditors in her own right these proxies were not quantified at the meeting.
· It was put to Ms Power that the ‘right and decent thing to do’ was for her to abstain for the upcoming vote on the appointment of a liquidator. It was pointed out that the liquidator had a number of questions to investigate regarding her conduct as director of the company and that it would be appropriate for her to abstain from voting regarding the appointment of her nominated liquidator. Ms Power stated that she would vote on the issue as was her right.
· A second motion was proposed and seconded that all creditors be treated fairly and properly compensated for their losses. The motion was put to a vote and all creditors present voted in favour of the motion except for Ms Power. As Ms Power represented a majority of creditors per the statement of affairs presented to the meeting, the motion was defeated.
Mr Murran then reminded the meeting that David Breen had been appointed liquidator that morning at a meeting of the Company’s shareholders and asked whether there were any alternative nominations from the floor. It was proposed and seconded that Michael Butler a liquidator of over 25 years experience be appointed as liquidator. The motion was put to a vote. All creditors present voted in favour of Mr. Butler’s appointment except for Ms Power. As Ms Power represented a majority of creditors per the statement of affairs presented to the meeting, the motion was defeated.
Mr Breen then addressed the meeting as liquidator and asked whether any creditors wished to form a Committee of Inspection. Five creditors joined the committee and the meeting was concluded.
