Public Affairs Editor
Restaurateur Jay Bourke has been declared bankrupt by the High Court following a request from tax commissioners over a tax liability of €558,000.
Mr Bourke (55) tried to secure a debt cancellation plan, known as a personal insolvency arrangement, to reduce the bulk of his €13.7million in debt, but this was withdrawn earlier this month after one of its creditors, Pepper Finance, which is owed 12.2 million euros, objected.
Pepper’s debt related to contingent liabilities arising from loans taken from the Bank of Scotland (Ireland) for the refurbishment of Bellinter House, the Co Meath hotel which he co-owned.
Mr Bourke had claimed that debt was a contingent liability and had been paid as part of a full and final settlement with the €3million sale of Bellinter House in 2016.
A well-known figure in Dublin nightlife, Mr Bourke operated popular bars and restaurants including The Globe and Rí Rá, Panti Bar, Eden Restaurant and Cafe Bar Deli.
It is understood that Mr. Bourke has consented to the bankruptcy petition of the tax authorities. He declined to comment when contacted by The Irish Times.
The High Court heard on Monday that his tax debt dated back to the Celtic Tiger years.
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He sold the Bodega pub in Cork, incurring capital gains tax of around €500,000. He tried to offset the gain by lowering the value of other assets he owned.
He suffered substantial losses resulting from the decline in value of Bellinter House which he attempted to offset against the capital gain on The Bodega, but this was dismissed by the courts after appealing tax liability.
The tax authorities then asked the High Court to declare him bankrupt for the outstanding tax debt.
This led the restaurateur to apply for a certificate of protection from the courts, adjourning the bankruptcy petition and allowing him to seek protection from his creditors so that he could devise a personal insolvency arrangement to resolve his financial difficulties while avoiding bankruptcy.
The bulk of Mr Bourke’s debts relate to loans from Bellinter House, smaller bank loans which he was unable to repay and personal guarantees which he was unable to honor due to the economic crash of 2008 -09.
Attempts to negotiate a deal with the taxman after the personal insolvency agreement was withdrawn failed, leading the taxman to file a new bankruptcy petition yesterday.
The revenues had supported the personal insolvency arrangement proposed by Mr Bourke.
“At the end of the day, the gap was too big,” said a source familiar with Mr Bourke’s debts.
Mr Bourke’s hopes of a €570,000 to €750,000 windfall payout from insurance broker XS Direct’s IPO to fund the personal insolvency arrangement were dashed when the brokerage was placed in receivership in February.
In its application for personal insolvency arrangement, Pepper Finance also objected to the €558,000 from the taxman being treated entirely as a privileged debt to be paid in full.
The lender’s lawyer had told the court that the preferential element of the debt had been overstated by around €200,000, giving Mr Bourke’s other creditors the impression that Revenue was legally entitled to be repaid in full.
Mr Bourke told The Irish Times last November, when he applied for the personal insolvency agreement, that his income had been “decimated” due to restrictions on bars and restaurants during the pandemic.
According to estimates in his own proposed personal insolvency agreement, Mr. Bourke’s creditors will receive just 0.01% of what is owed to them under the one-year bankruptcy, compared to 0.5% of what they would have received under the now discontinued personal insolvency agreement. .
Bankruptcy costs are estimated at just over €100,000.