No Holiday For Power Directors


Behind each and every case published in StubbsGazette each month there is some kind of story to relate – without exception painful. From the debtor’s perspective, it’s often a story about the dashed dreams of an entrepreneur: bad luck, unforeseen adverse circumstances or perhaps the case of someone not quite as talented or creative as they thought they were. Misguided people who nonetheless entered into their arrangements in good faith and with high hopes.

More often than not, however, the judgments tell an altogether different and damning story: a story perhaps of downright incompetence or – even worse – recklessness. In the worst cases there is a story of calculated manipulation and defrauding of creditors.

One of the consequences of the financial crisis in this country and the massive amounts of debt and default at sovereign, corporate and personal levels, is the depersonalisation of the effects of bdefault: the creditors are faceless banks and institutions – ergo there are no consequences.

But every now and again a case pops up that brings home the reality. Such a case is that of online travel booking website selfcatering.ie which on July 19th sent its customers the following email:

It is with deep regret that after 14 years in business, Selfcatering.ie announces that it has ceased trading with immediate effect. We acknowledge that as a customer, you will be inconvenienced and also may be impacted financially as a result. We apologise for this unreservedly. Please appreciate that this was a last resort with every effort made by the company to prevent this situation, and it is with deep regret that the company has ceased trading. We would advise you to contact the relevant property owners or caretakers directly so that a solution might be arranged regarding your holiday.

Power Holiday Management Ltd. One can only imagine the dismay of hundreds of families and other folk who on receipt of this realised to their horror that their long awaited two weeks by the sea and the hard-earned money that fundedit were likely gone forever. Their disappointment, frustration and anger may be all the more keenly felt given that the face of Power Holiday Management, director Mary Power, was TV3’s “travel expert” whose presence on the station was probably something that gave them some reassurance when parting with their cash. This case has naturally attracted the attention of the mainstream media due to the particular circumstances to which every individual who enjoys their holidays can relate but there are grounds for subjecting the case of Power Holiday Management to additional scrutiny.

StubbsGazette understands that for a number of weeks preceding the cessation of trading of the company, it had insisted on payment by cheque or bank draft, refusing to accept credit cards. This is highly significant as, under the rules pertaining to credit cards, in cases where the cardholder does not receive the goods ordered, the amount will be charged back to the merchant. It is the responsibility of the merchant to ensure there are sufficient funds in the  designated bank account to honour these chargebacks. If for any reason the merchant cannot pay the chargeback, the liability falls on the merchant’s sponsoring bank (known as the acquiring bank). While none of this applies because the  merchant in this case ceased accepting credit cards before the cessation, it does not take a person of unusually suspicious mind to speculate on why such a merchant would insist on cash and cheques as payment in such a distressed situation. Payment in cash and cheques is immediately credited to the bank account in question. This is highly relevant in a subsequent insolvency where, for example, personal guarantees may have been given by the directors in respect of bank loans and/or overdrafts. By insisting on cash payment, the directors ensure maximum favourable impact on the bank balance, thus ultimately diminishing any subsequent personal liability (but at the expense of customers who would have preferred to pay by credit card). One should also look at the role of the banks and the potential for their preferential treatment at the expense of customers.

Imagine a business that is in increasing difficulty with its bank facilities. The directors have given personal guarantees in respect of their loans and overdrafts. The bank in question is also the merchant’s acquiring bank and knows that it ultimately will have to bear the cost of any merchant chargebacks in the event of the insolvency of the business.

It consequently advises the business to cease accepting credit cards and improve its situation with the bank as, in the event of insolvency, the directors will be made personally liable.

In the case of Power Holiday Management, the timing would be opportune as bookings in mid-summer are at their peak while settlement with owners of the rental properties may be staggered – thus it is fair to say that the cessation took place when the company’s cash flow was at its seasonally highest point.

No-one is suggesting that this is in fact what occurred - in fact this appears to be overwhelmingly a case of trading while insolvent but the potential is obvious. Those who have been burnt by Power Holiday Management and who would wish to clutch at straws could study the case of Farepak in the UK, a Christmas savings club where the banks were ultimately found to have played excessively “hardball” at the expense of the customers and where a settlement of some 50 pence in the pound has now been made this month (albeit some six years after the company’s closure).

The Power Holiday Management case is a good example of how the ordinary consumer typically finds him or herself in the position of having to more or less blindly trust that all is well with a supplier. If, for example, any of those would-be holidaymakers were in a position to run a StubbsGazette credit report on Power they would immediately have looked elsewhere for their holiday plans.

With a credit score of just 44, Power Holiday Management was clearly not a place for one to entrust one’s holiday funds. Power’s latest filed accounts to December 2010 show a company that is hopelessly insolvent to the tune of €1 million plus. In addition, StubbsGazette is aware of a number of demand letters sent to the company in recent times – all symptoms of a terminal condition. In addition, the company had substantial bank loans and directors’ loans and any movement on those accounts between December 2010 and July 2012 will be revealing. Even the premises the company operates from is out of the reach of its creditors – it is owned by directors Mary and TJ Power who are paid an annual rent of €24,000 by the company.

Here at StubbsGazette we will await the Power Holiday Management’s creditors’ meeting with interest.

Top Judgments Registered

11.11.2020

Urban Green Private Limited
Address: R/o Atkins Hall, River Towers, Lee Road, Cork
Amount: €734,547.90

16.11.2020

Cabins 4 Less Limited
Address: R/o 4 Roberts Hill, Circular Road, Kilkenny
Amount: €14,188.00

16.11.2020

Chris Murphy
Address: 921 St Patricks Park, Celbridge, Kildare
Amount: €12,339.20

16.11.2020

Martin Kenny
Address: 265 Mellifont Park, Drogheda, Louth
Amount: €9,465.30

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