Horse Sport Ireland (HSI) has been given the protection of the High Court, with an interim examiner appointed as part of an attempt by its directors to save the national equestrian sports governing body.
Barrister Arthur Cunningham on Monday told Judge Liam Kennedy that although the company was unable to pay its debts, an independent expert was of the view it could be saved through examinership.
He said chartered accountant Joseph Walsh had agreed to act as examiner and was appointed by the judge on an interim basis.
HSI, the national governing body for the equestrian sector, receives more than €6 million in State funding each year, with the bulk coming from the Department of Agriculture. Sport Ireland also awards grants for its high-performance equestrian teams.
HSI had an emergency town hall meeting for staff on Monday afternoon at its headquarters in Naas where employees were briefed on the consequences of the examinership process.
HSI employs 47 full-time staff and they were told there would possibly be redundancies in order to reduce payroll costs.
A source in the HSI said staff were shocked and most had no warning that the organisation’s finances were so bad. “It’s just a complete bolt from the blue”, one said.
The company has historically maintained nominal reserves to insulate it against any trading issues or significant trading losses, but had been hit with large legal costs arising from various sets of proceedings, the court heard.
The petition for the appointment of an interim examiner was brought by the company’s directors following a meeting on August 20th, at which it was agreed to appoint Graham Kenny Solicitors to advise the company.
The main reason for the establishment of the company in 2006 was to act as the centralised national body for the entire sport horse industry.
The directors listed in the petition proceedings were Kevin Smyth of Balally Park, Dundrum, Dublin; Allison Mercer of Kinallen, Dromore, Co Down; Susan Foley of Adare, Co Limerick; Karen Brosnan of Westown, Naas, Co Kildare; Pamela Byrne of Rathangan, Co Kildare; David Markey of Cabinteely, Dublin; Robert Huey of Cookstown, Co Tyrone; and Killian Carroll of Blackberry Hill, Carrickmines, Dublin.
It was revealed that the company had incurred costs of €1,581,995 in relation to the development of software programmes as of the end of June last, and had ongoing obligations in relation to pensions and payroll.
Cunningham said the company directors considered that the appointment of an interim examiner would be in the interests of the creditors across a number of jurisdictions. He said there would be an immediate requirement to engage with them to explain the examinership process. The interim examiner would allow an investment process to commence immediately.
Independent expert Cormac Mohan, of AAB Ireland, had stated that the formulation, acceptance and confirmation of proposals for a scheme of arrangement, in conjunction with the introduction of additional capital or support of DAFM and Sport Ireland, would offer a reasonable prospect of survival.
The company was confident that these conditions could be met and the directors believed that the examinership process would afford the company a reasonable prospect of trading successfully into the future and preserving the current jobs.
In a statement, HSI said the decision to apply for the appointment of an examiner “follows the crystallisation of a substantial legacy liability relating to the defence of a long-standing legal action brought by Studbook Development Ireland Limited t/a Warmblood Studbook of Ireland against various defendants, including HSI.
“Having considered all the available options, and taken professional legal and financial advice, the board believes that examinership provides the best available opportunity to protect the organisation, preserve employment and secure its long-term future.
“Horse Sport Ireland continues to operate, and management will work constructively with the examiner, employees, funders, creditors and other stakeholders throughout the process.
“Examinership is a statutory corporate rescue process and is intended to provide a viable company with an opportunity to restructure its affairs under the protection and supervision of the court.
“As the matter is now before the court, it would not be appropriate for the board to comment further on the circumstances giving rise to the proceedings or on matters that may fall for consideration by the court.
“The board will provide further updates when it is appropriate to do so.”