Belfast art gallery business hopelessly insolvent, says judge
Published 08/04/2014 | 15:57
A top Belfast art dealership business with debts of more than £2 million has no realistic prospect of being saved, a High Court judge has ruled.
Mr Justice Horner described the Taylor Gallery as being "hopelessly insolvent" as he backed its creditor bank's choice for who should be appointed administrator.
The gallery, which trades in fine and contemporary artwork, has been trading for more than a decade at its Lisburn Road premises.
But legal proceedings were issued by Danske Bank against partners John Taylor and Stephen Donnelly.
The court heard how the Gallery, referred to as the partnership, was severely hit by the economic downturn.
The bank is currently owed just over £2m, although property held as security will bring the shortfall down to £1.67m.
In February it lodged an application to have the partnership placed into administration and put forward a preferred choice.
In response, Mr Taylor and Mr Donnelly sought an alternative insolvency practitioner.
Ruling on the case, Mr Justice Horner set out how the dealership's stock had been valued at £1.57m in April 2012.
By September 2013 it was down to first £924,000 and then £290,000.
At the start of this year the value had fallen again to around £200,000.
Mr Justice Horner said: "Firstly, in this case there is no realistic prospect of saving the business.
"The central purpose of the administration, is to achieve a better result for the creditors, and in particular the applicant. It is the major, if not the only, creditor."
According to the judge the partners do not have the same financial interest in securing the best result possible in realising assets.
On that basis the bank's choice of administrator should carry great weight, he held.
He added: "In this case, there have been different and decreasing valuations of the fine art stock of the Partnership within a relatively short period of time.
"Such a state of affairs demands a rigorous and independent professional analysis by the administrator."
In those circumstances he said it would be better for the administrator to be the bank's nominee.
Mr Justice Horner concluded: "The competition for who should be appointed as administrator of this hopelessly insolvent partnership has been keenly contested.
"However, there can only be one winner. The view of the major, or on one view the only, creditor must carry great weight as the administrator, who will be appointed, will be trying to realise as much as possible for the benefit of creditor."