Archive for August, 2009

Irish Social Welfare Payments highest in Europe

August 14, 2009

It’s amazing to compare our social welfare payments with the UK.  Our unemployment benefit alone has gone from 66pct higher than the UK in 2003 to 200% higher in 2009.

Weekly Unemployment benefit comparisons for 2009

Ireland  euro 204.30       UK  euro 69.58

Weekly Old age Pension comparison.

Ireland  euro 230.30     UK  euro 109.54

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Irish Hotel Tax Incentive Schemes and their downfall

August 14, 2009

Irish hotels have benefitted from a myriad of tax incentive schemes which are now seriously affecting the tourism industry as a whole.  The tax breaks were exploited to such an extent that not only were too many rooms added creating massive over-capacity but many hotels were built in ridiculous locations.  Tax break hotels were often built by developers rather than hoteliers and all they cared about was a 7 year tax freebie.  They couldn’t have given a jot about the guest.

The sting in the tail of the tax break is that if a hotel that has benefitted from these tax breaks does not stay open for seven years after the development, the investor will have to repay the tax breaks against their personal tax bills.  What we have now is a situation where unprofitable hotels remain open, reducing rates to ridiculous levels thus seriously damaging those operations that are viable.  The Irish Hotels Federation has calculated that there are 21,000 hotel rooms that fall short of the 7 year requirement (out of a total number of about 60,000 hotel beds in the country).  Another scary figure is that the average occupancy rate over all hotels in Ireland is just 53pct and overseas visitors to Ireland this year have declined by nearly 19pct.

Examinership Fees

August 14, 2009

An interesting article about examinership fees appeared in the Irish Times, Monday, 3rd August, by John McManus entitled ‘Examinership fees need to be examined very closely’.  Lawyers and accountants seem to be still living in Celtic Tiger bubble land where charges of euro 250 per hour for photocopying are in order.  Given the number of examinerships being applied for, unless these fees are reined in, these two professions will continue to roll in the money whilst many many people elsewhere in the country will be seriously licking their wounds.

Examinership – My understanding of it

August 14, 2009

This is a mechanism for ailing but potentially viable companies to be rescued and returned to profitability.  It was introduced by the Companies Act of 1990 and 1999 and is somewhat similar to chapter 11 in the US and administration in the UK though the latter gives more support to the creditor than the debtor.  The period given for examinership is up to 100 days.

Examinership allows a company a period of protection from creditors in order to work out a plan for fresh investment and most likely the writing off of claims from creditors.  The court appoints an examiner who tries to come to an arrangement for the company that is acceptable to the creditors.  The court has to be satisfied that the creditors wouldn’t be worse off than they would if the company was liquidated.

The directors continue to manage the company whilst in examinership (unlike administration in the UK where the administrators take over).

An unsuccesful examinership ends in liquidation.