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Stephen Roche pledges to pay creditors of his Mallorca-based cycling holiday business €600,000Stephen_Roche_2017 (licensed CC BY SA 3.0 by DianeAnna on Wikimedia Commons)

Stephen Roche pledges to pay creditors of his Mallorca-based cycling holiday business €600,000

Irish ex-pro who won Triple Crown in 1987 says he wants to avoid bankruptcy - but courts may decide issue for him
by Simon_MacMichael
Sun, Apr 14, 2019 18:08
8

Irish cycling legend Stephen Roche has vowed to repay debts that he estimates at €600,000 to creditors of his Mallorca-based cycling holiday business.

The 59-year-old, who in 1987 won the triple crown of the Giro d’Italia, Tour de France and road world championship, revealed the extent of the business's financial problems in an interview with Extra.ie.

He rejected accusations that he had acted fraudulently in continuing to trade despite the business being insolvent, and denied running away from his liabilities.

He said: “I have been very upfront with the people I owe money to. When I hear I’ve run away or I’m trying to get away without paying, that’s not me. That’s not me. Never.”

According to Extra.ie, a company called World Spry Services petitioned a Spanish court to launch a criminal investigation into Roche and his business, Shamrock Events SL.

The company, which provided airport transfers for Roche’s clients, alleged fraud and concealment of assets, but the case was closed after he paid it the €30,000 he owed it last month.

However, on 20 March a fresh lawsuit was brought by the owners of two hotels on the island, the Ponent Mar Hotel and the Hotel Son Caliu.

They say that Roche’s business owes them a combined €392,446, and have asked for it to be declared bankrupt and subject to compulsory liquidation.

Their lawsuit claims that the business was reckless in continuing to trade despite its financial problems, disadvantaging existing creditors, and also questions whether Roche’s absence from Mallorca means he is seeking to avoid his creditors.

A lawyer acting for the Ponent Mar Hotel told Extra.ie: “I anticipate the judge will appoint a bankruptcy administrator in a very short space of time with all the consequences that carries.”

Should the court find that there had been fraud or reckless trading, it could give permission for creditors to pursue his personal assets.

Roche, who estimates the total debts at €600,000, has has pledged to repay the money owed, including through selling a property in France and unspecified future cycling projects in Switzerland and Hungary he is in discussions about.

He said: “Going back with my hands empty is not going to do anything.

“If I can get something together and I go back and pay all my bills, I can keep things going.’

“The hardest part is I have always been straight up and honest with people I owe money to and the hardest part was to accept their reaction.

“I’ve been in contact with them. I’ve sent them emails about my plans, saying: ‘I can pay you so much a month for the next number of months’.”

Roche said that while he had thought about declaring himself bankrupt, he decided against it “Because the people who have helped me are going to lose out.”

While the Stephen Roche Cycling website is still live, clicking on the button to make a booking redirects to a separate site, VIP Cycling, owned by German former pro cyclist Guido Eickelbeck, a friend of Roche’s.

He told Extra.ie that the pair had considered going into partnership prior to the scale of the debts owed by Roche’s business coming to light.

While the two businesses remain separate, Eickelbeck confirmed that VIP Cycling is now handling Roche’s clients.

Stephen Roche
Mallorca
Simon MacMichael

Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.

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8 comments

Avatar
John Smith | 5 years ago
1 like

Spanish business law has a lot of similarities to UK law. It is not 100% applicable but under The European Initiative on the Harmonisation of Directors’ Duties in the Vicinity of Insolvency the EU have been trying to harmonise the relevant laws for the last 15 years. Unfortunately my Spanish is not good enough to understand the current law in detail and it’s been 8 years since I have dealt with any none UK companies to any significant extent. 

Avatar
don simon fbpe replied to John Smith | 5 years ago
0 likes

John Smith wrote:

Spanish business law has a lot of similarities to UK law. It is not 100% applicable but under The European Initiative on the Harmonisation of Directors’ Duties in the Vicinity of Insolvency the EU have been trying to harmonise the relevant laws for the last 15 years. Unfortunately my Spanish is not good enough to understand the current law in detail and it’s been 8 years since I have dealt with any none UK companies to any significant extent. 

I think that the fact that debts aren't written off in Spain has focussed Roche senior into not putting debt onto Roche junior and encouraged a prompt payment. That's quite a big difference.

 

Avatar
PRSboy | 5 years ago
1 like

Either way its a shame for the staff who worked for SR Cycling.  I had a week in Mallorca with them a couple of years ago and it was great- well organised and fun.  I wish them well and I hope they are not out of pocket.

Avatar
Rick_Rude | 5 years ago
0 likes

He's not pulling this out of hole that big.

If the business is viable then the money has been used elsewhere. If everything is straight down the line then there's no money in his cycling business model.

Avatar
John Smith | 5 years ago
2 likes

Just another business owner listening to his own ego rather than the facts. If you can’t pay the bills when they are due then you are insolvent and trading illegally. It doesn’t matter if you think you can pay next week or next month,  if the bills are due they are due.

Avatar
madcarew replied to John Smith | 5 years ago
1 like

John Smith wrote:

Just another business owner listening to his own ego rather than the facts. If you can’t pay the bills when they are due then you are insolvent and trading illegally. It doesn’t matter if you think you can pay next week or next month,  if the bills are due they are due.

That's a very narrow definition of insolvency, and no, it is not illegal to trade under that definition of insolvency. It is illegal to continue to trade if your balance sheet shows you are insolvent, that is you have less assets than debts. Under your definition of insolvency most SMEs would be insolvent at some point in most years, as for most SMEs cashflow is the most difficult part of continuing trading. It sounds like you have never run your own business.

Avatar
John Smith replied to madcarew | 5 years ago
1 like

madcarew wrote:

John Smith wrote:

Just another business owner listening to his own ego rather than the facts. If you can’t pay the bills when they are due then you are insolvent and trading illegally. It doesn’t matter if you think you can pay next week or next month,  if the bills are due they are due.

That's a very narrow definition of insolvency, and no, it is not illegal to trade under that definition of insolvency. It is illegal to continue to trade if your balance sheet shows you are insolvent, that is you have less assets than debts. Under your definition of insolvency most SMEs would be insolvent at some point in most years, as for most SMEs cashflow is the most difficult part of continuing trading. It sounds like you have never run your own business.

 

No, but I was a credit manager for 15 years. Strictly the definition of insolvent is a company is unable to pay its debts, as defined under section 123 of The Insolvency Act (1986):

(1)A company is deemed unable to pay its debts—

(a)if a creditor (by assignment or otherwise) to whom the company is indebted in a sum exceeding £750 then due has served on the company, by leaving it at the company’s registered office, a written demand (in the prescribed form) requiring the company to pay the sum so due and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, or

(b)if, in England and Wales, execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part, or

(c)if, in Scotland, the induciae of a charge for payment on an extract decree, or an extract registered bond, or an extract registered protest, have expired without payment being made, or

(d)if, in Northern Ireland, a certificate of unenforceability has been granted in respect of a judgment against the company, or

(e)if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due.

(2)A company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the company’s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.

 

Wrongful trading (the illegal bit), under section 214, subsection 2, clause b, of the same act, is defined as:

(b)at some time before the commencement of the winding up of the company, that person knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation, and...

Strictly nither your definition or mine is  true under UK law, but my definition was a broad summation of section 123, subsection 1, clause a & b and section 214, subsection b. Your understanding, however, is what leads companies in to insolvency. The book value of assets and liabilities is an indicator but not evidence of solvency. Both are often incorrect in reality, either through known accounting practices, such as depreciation formulas not reflecting reality or failure to have an accurate bad debt provision. This can be caused by a lack of understanding of the reality vs the accounting model or the ego of director(s) taking the best case or even distortion of the reality. Often this is not intentional, and wrongful traiding cases often fail to prove the reasonableness due to this, but are due to directors not willing to accept facts, and believe that they can fix a company with “one big sale” or “next month will be better”, which is exactly what we are seeing in this case.

The fact that creditors let companies continue trading and paying late has more to do with pragmatic business practices than legal definition.

Avatar
don simon fbpe replied to John Smith | 5 years ago
1 like

John Smith wrote:

madcarew wrote:

John Smith wrote:

Just another business owner listening to his own ego rather than the facts. If you can’t pay the bills when they are due then you are insolvent and trading illegally. It doesn’t matter if you think you can pay next week or next month,  if the bills are due they are due.

That's a very narrow definition of insolvency, and no, it is not illegal to trade under that definition of insolvency. It is illegal to continue to trade if your balance sheet shows you are insolvent, that is you have less assets than debts. Under your definition of insolvency most SMEs would be insolvent at some point in most years, as for most SMEs cashflow is the most difficult part of continuing trading. It sounds like you have never run your own business.

 

No, but I was a credit manager for 15 years. Strictly the definition of insolvent is a company is unable to pay its debts, as defined under section 123 of The Insolvency Act (1986):

(1)A company is deemed unable to pay its debts—

(a)if a creditor (by assignment or otherwise) to whom the company is indebted in a sum exceeding £750 then due has served on the company, by leaving it at the company’s registered office, a written demand (in the prescribed form) requiring the company to pay the sum so due and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, or

(b)if, in England and Wales, execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part, or

(c)if, in Scotland, the induciae of a charge for payment on an extract decree, or an extract registered bond, or an extract registered protest, have expired without payment being made, or

(d)if, in Northern Ireland, a certificate of unenforceability has been granted in respect of a judgment against the company, or

(e)if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due.

(2)A company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the company’s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.

 

Wrongful trading (the illegal bit), under section 214, subsection 2, clause b, of the same act, is defined as:

(b)at some time before the commencement of the winding up of the company, that person knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation, and...

Strictly nither your definition or mine is  true under UK law, but my definition was a broad summation of section 123, subsection 1, clause a & b and section 214, subsection b. Your understanding, however, is what leads companies in to insolvency. The book value of assets and liabilities is an indicator but not evidence of solvency. Both are often incorrect in reality, either through known accounting practices, such as depreciation formulas not reflecting reality or failure to have an accurate bad debt provision. This can be caused by a lack of understanding of the reality vs the accounting model or the ego of director(s) taking the best case or even distortion of the reality. Often this is not intentional, and wrongful traiding cases often fail to prove the reasonableness due to this, but are due to directors not willing to accept facts, and believe that they can fix a company with “one big sale” or “next month will be better”, which is exactly what we are seeing in this case.

The fact that creditors let companies continue trading and paying late has more to do with pragmatic business practices than legal definition.

Is any of that UK legislation relevant for a Mallorcan based company? I wonder why, according to Spanish law, he's settled up so quickly.

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