Examination Reveals Nearly €4.5 Million in Loans Given to Linked Businesses at Fade Street Social
In the heart of Dublin, the examinership of the Fade Street Social restaurant group has taken an intriguing turn, with a forensic investigation delving into substantial loans totaling almost €4.5 million made to three companies associated with chef Dylan McGrath and his business partner Vincent Melinn.
The investigation, conducted by staff at recovery specialists Azets, is scrutinising the inter-company loans to assess their legitimacy and financial impact amid Fade Street Social's financial difficulties. The loans were made during a period preceding the restaurant company's financial distress, and the key findings so far indicate that they were substantial.
The examination encompasses categories such as transfers to directors, unknown transactions, intercompany transfers, payments to Revenue, payments for rates, staff wages, insurance, professional fees, creditor payments, cash and credit card lodgements, and building works. Copies of recipient company bank statements to confirm the ultimate beneficiaries of fund transfers have been provided to the related companies, and a full review of all transactions in Fade Street Social's bank statement is undergoing continuous review by Mr. Morrow's staff.
The response from the majority of creditors has been positive and supportive of formulating proposals to save the company, with the examiner, Mr. Morrow, expressing that the engagement with key suppliers has been positive as well. The examiner anticipates that the company will remain a significant employer post-examinership if his proposals are approved.
In a significant development, Mr. Morrow has extended the time for the examinership into September, as he seeks more time to save the restaurant, which owes Revenue €1.7 million. He is also awaiting details of Revenue's ultimate claim, initially estimated at €1.7 million.
It is worth noting that Dylan McGrath and Vincent Melinn, the directors of Fade Street Social, were also directors of the three related companies that previously operated in the restaurant trade. However, as of the latest reports, no direct accusations or legal actions stemming specifically from these loans have been made public, nor has there been a response from McGrath or Melinn regarding the investigation.
The investigation's findings have not yet concluded whether any breach of finance laws arose, given the provision of funding to companies with common directors. Detailed conclusions from the forensic review, such as any allegations of misuse or recommendations, have not been publicly disclosed as of the latest reports.
As the investigation continues, the future of Fade Street Social and its associated companies remains uncertain, but one thing is clear: the spotlight is on the inter-company loans, and the findings of the forensic investigation will undoubtedly shape the course of the examinership process.
[1] Examinership of Fade Street Social restaurant group under scrutiny for inter-company loans. (n.d.). Retrieved from https://www.rte.ie/news/business/2022/0707/1271561-fade-street-social-examinership/
[2] Fade Street Social: Examinership extended as €4.5m probe into loans continues. (2022, July 7). Retrieved from https://www.irishtimes.com/business/food-and-drink/fade-street-social-examinership-extended-as-4-5m-probe-into-loans-continues-1.4607229
The investigation, led by Azets, is probing the legitimacy and financial impact of substantial loans made to companies associated with chef Dylan McGrath and his business partner Vincent Melinn, with the focus on inter-company loans within Fade Street Social's business. The findings of this investigation are crucial for shaping the examinership process.
The examination of Fade Street Social's finances involves an analysis of various transactions, including transfers to directors, payments for staff wages, professional fees, creditor payments, and building works, among others. The goal of this scrutiny is to determine if any breach of finance laws arose from the inter-company loans.
