Restructuring your business
Declan Taite, FGS Partner,
Corporate Restructuring & Insolvency
Experience overview
 Macreddin Golf Club: Acted as Receiver and
Manager to the acclaimed golf course designed by
Irish Ryder Cup legend Paul McGinley.
 Michael McNamara & Company: Appointed
statutory receiver by NAMA.
 Vantive Holdings and Morston Investment Ltd:
Appointed Official Liquidator to the two holding
companies within Liam Carroll’s Zoe Group.
Experience overview
 Zoe Group: appointed Receiver to four companies
within Group, with significant land banks within the
Dublin Docklands area.
 Kinnitty Castle Hotel: appointed Receiver to the
renowned hotel and wedding venue.
 BDS Security Management: appointed Receiver to
one of Ireland’s largest providers of static security
care.
Experience overview
 Elenco Engineering Ltd: appointed official
Liquidator to this top five mechanical and electrical
provider.
 Building/development companies: appointed
Receiver and Manager to a series of companies
located in Kilkenny, Laois, Wexford, Cavan, Mayo,
Leitrim and other counties.
Presentation contents:
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Introduction/General Overview
Recent high profile golf club failures
Sustainability and Profitability
Working Capital Management
What is Insolvency?
Implications of Insolvency for Directors?
Restructuring Options
Some good news?
Introduction / General overview
 Unprecedented economic environment.
 Record levels of insolvency & business failures.
 1 in 7 failures occurring within hospitality / leisure
sector.
 Illiquid market.
 Working capital pressures.
Introduction / General overview
 Debt burden.
 Significant over-capacity in the golf club sector with
in excess of 430 clubs.
 Falling membership numbers.
Introduction / General overview
 Questions must be asked regarding sustainability
of certain golf clubs:
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What can be done?
What are the options?
How do we preserve sustainability and profitability?
There is no magic solution!!!
Recent high profile golf club failures
 The Macreddin Golf Club plc.
 Moyvalley Golf Club plc
 Blarney Golf Resort
 Heritage Golf Club
 Tulfarris Golf Club
Sustainability & profitability issues
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Joining fees
Annual memberships fees
Green Fees
Catering / food & beverage
Pro shop
Bank debt
IT Automation
Marketing
Recalibration of economic model required
Working capital management
 Know what your club’s burn rate is – the rate
at which the club is consuming cash on a
monthly basis.
 Identify the timing of major cash outflows
within the club.
 Identify also those external factors which will
impact on the cash-flow of the business i.e.
seasonality issues, adverse weather etc.
Working Capital Management
 Review cash-flow projections, at least, on a
monthly basis.
 Monitor actual cash-flow performance against
projections and ensure all financial information is
kept up to date to allow for quick informed
decisions to be made.
Working capital management
 Preserve cash by maximizing credit terms
from suppliers. Review all cash outgoings and
eliminate unnecessary expenditure.
 Seek financial advice early if you anticipate
pressure on the club’s cash-flow – don’t stick
your head in the sand!
Working capital management
 In terms of those clubs with bank debt –take a
proactive approach by meeting your bank
manager if cashflow problems are foreseen, before
they approach you!
 Take positive steps to manage the situation.
What is Insolvency?
 Definition of Insolvency
 On becoming aware of insolvency…..
» Seek relevant legal and financial advice.
» Preserve assets for benefit of all creditors.
» Do not incur any further credit.
» Do not make any payments other than justifiable
payments associated with preserving assets
(insurance, security, utilities).
» Do not dispose of assets.
Implications of Insolvency for
Directors
 Potential Restriction / Disqualification from acting as
director of a company (Section 150 & 160,
Companies Act, 1990).
 Potential Fraudulent & Reckless Trading (Section
297 / 297A, Companies Act, 1963 as amended).
 Potential Fraudulent Preference (Section 286,
Companies Act 1963).
 Potential Loss of Tax Clearance Certificate.
 Crystallization of Personal Guarantees.
 May affect personal ability to borrow.
Restructuring Options
 Remember that approximately 20% of respondents
have bank debt greater than annual revenue.
 Credible cash-flows / projected P&L a pre-requisite
in negotiating with finance provider:
» Term of loan
» Interest Rate
» Capital Reduction / Moratorium
Restructuring Options
 Levies.
 Franchise options for catering.
 Sharing arrangements between clubs – co-op type
arrangements.
 Strategic Plans a must for any restructuring option.
 Outsourcing of course maintenance costs, payroll
costs, machinery & vehicle leasing costs.
Restructuring Options
- An Outsourced Solution
Golf Club XYZ - An Outsourced Example
Cost Area
Efficiencies Achieved
Course Maintenance Costs
27%
Payroll Costs
22%
Machinery and Vehicle Leasing Costs
33%
Some good news?
 An important ECJ ruling may provide an
opportunity for member owned clubs to make
protective claims for VAT overpaid on Green Fees
in the last four years.
 In Ireland, VAT exemption currently applies only to
membership fees for these clubs, whereas green
fees are subject to VAT at the reduced rate of
13.5%.
Some good news?
 However, the ECJ decision in Canterbury Hockey
Club strongly indicates that the VAT treatment of a
service should not be determined by the status of the
recipient of that service i.e. it should not matter
whether the recipient is a club member or not.
 The logical conclusion to be drawn from the ECJ’s
ruling is that VAT exemption should apply not only
to membership fees, but also to visitors’ Green
Fees when received by a non-profit making
organisation such a member owned golf club.
Some good news?
 In the UK, a large number of claims have been
submitted by member owned golf clubs in respect of
VAT paid to HMRC on green fees for the last four
years.
 HMRC in the UK currently contend that the ECJ
ruling does not apply in full to non-profit making
organisations and as a result have not yet repaid any
of these claims. It is likely that HMRC’s stance will
eventually be challenged, but it is impossible to say
how soon such a test case will arise.
Some good news?
 In the meantime, you may wish to consider
preparing and submitting a protective claim for VAT
paid on green fees during the last four years.
Please Note: This slide presentation is for guidance
purposes only and should not be relied upon as being
sufficient in specific circumstances.
For further advice or assistance please contact:
Declan Taite,
Partner FGS Corporate Restructuring & Insolvency
T: + 353 (0) 1 4182000
E: declan.taite@fgspartnership.com
For further information about FGS visit
our website:
www.fgspartnership.com
Thank you
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