Restaurateur Jay Bourke has been declared bankrupt by the High Court following an application by the Revenue Commissioners for a tax debt of €558,000.
Mr. Bourke (55) tried to secure a debt relief plan, known as a personal insolvency agreement, to reduce most of his €13.7m in debt, but withdrew earlier this month after that one of his creditors, Pepper Finance, which is owed 12.2 million euros, objected.
Pepper’s debt related to a contingent liability arising from loans taken from the Bank of Scotland (Ireland) for the renovation of Bellinter House, the Co Meath hotel that he co-owned.
Bourke had claimed that this debt was a contingent liability and had been paid in a full and final settlement with the sale of Bellinter House for €3 million in 2016.
A well-known figure on the Dublin nightlife scene, Mr. Bourke operated popular bars and restaurants, including The Globe and Rí Rá, Panti Bar, Eden Restaurant and Cafe Bar Deli.
Mr. Bourke is understood to have granted Revenue’s bankruptcy petition. He declined to comment when contacted by The Irish Times.
The High Court heard on Monday that his tax debt dates back to the Celtic Tiger years.
Sold The Bodega pub in Cork generating a capital gains tax liability of around €500,000. He tried to offset the gain with the decline in value of other assets he owned.
Get the latest business news and insightsSIGN UP HERE
He had substantial losses stemming from the fall in value of Bellinter House which he attempted to offset with the capital gains from The Bodega, but this was rejected by the courts after he appealed for tax liability.
Subsequently, the Department of Revenue applied to the High Court to declare him bankrupt for outstanding tax debt.
This prompted the restaurateur to seek a certificate of protection from the courts, deferring the bankruptcy filing and allowing him to seek protection from his creditors so he could devise a personal insolvency agreement to address his financial difficulties and avoid bankruptcy.
Most of Bourke’s debts relate to loans from Bellinter House, smaller bank loans that he was unable to repay, and personal guarantees that he was unable to honor due to the 2008-09 economic crisis.
Attempts to negotiate an agreement with the Treasury after the withdrawal of the personal insolvency agreement failed, resulting in the Treasury filing a new bankruptcy petition yesterday.
The proceeds had supported Bourke’s proposed personal bankruptcy settlement.
“In the end, the gap was too big,” said a source familiar with Bourke’s debts.
Bourke’s hopes of a windfall of €570,000 to €750,000 from the IPO of insurance broker XS Direct to finance the personal bankruptcy settlement were dashed when the broker went into receivership in February.
During its personal insolvency settlement application, Pepper Finance also objected to Revenue’s €558,000 being treated in its entirety as senior debt payable in full.
The lender’s lawyer had told the court that the senior element of the debt had been overvalued by some €200,000, giving Mr Bourke’s other creditors the impression that Revenue was legally entitled to full repayment.
Bourke told The Irish Times last November when he filed for the personal bankruptcy settlement that his income had been “decimated” due to restrictions placed on bars and restaurants during the pandemic.
According to estimates in his own proposed personal bankruptcy settlement, Mr. Bourke’s creditors will receive just 0.01 percent of what they are owed for the one-year bankruptcy compared to 0.5 percent for what they would have received under the now-abandoned personal bankruptcy settlement. .
Bankruptcy costs are estimated to be just over €100,000.