Category: Archive

Bureaucracy, debt spiral scuttled Sheeran project

February 16, 2011

By Staff Reporter

By Harry Keaney

When former Tara Circle president Ed Sheeran filed for personal bankruptcy last October, he listed his total liabilities at $582,673, according to his petition to the U.S. bankruptcy court for the Southern District of New York in White Plains.

Sheeran, a former Chase Bank executive, petitioned for Chapter 7 bankruptcy because of his inability to meet personal financial demands arising from the failure of his effort to develop a hotel and golf course resort on the shore of Lough Key, near Boyle, in his native County Roscommon.

Sheeran’s bankruptcy petition shows that he spent $200,000 from his Chase Bank early retirement package in an effort to keep his Roscommon project afloat. He was also hired as a consultant for a not-for-profit corporation which paid $1,000 a week gross.

The bankruptcy petition also outlines how Sheeran began utilizing lines of credit on various credit cards and line-of-credit accounts, as well as having to personally guarantee loans from the National Irish Bank, in Boyle, and from the Arigna Enterprise Fund, a local development agency in County Roscommon.

The Arigna Enterprise Fund, with a claim of $186,250, and National Irish Bank, with a claim of $116,220, are Sheeran’s two biggest creditors, although they hold unsecured nonpriority claims, according to the petition.

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The other unsecured nonpriority claims, as well as potential claimants against Sheeran’s company, the Rockfield Corporation or Rockfield Limited Partnership, are from banks and credit card companies, as well as from individuals and businesses in the U.S. and Ireland.

Two creditors, Chase Manhattan Mortgage Corp. and the IRS,

hold secured claims totaling $143,300, according to the October petition.

Sheeran’s total monthly income was listed at $6,759. This, according to the petition, came from take home pay of $2,463.96 from his job as a public relations director for the Queens Surface Corp., in Flushing, and $4,295.74 from his job as a director with Yonkers Industrial Development Agency. His total monthly expenses were listed at $4,721.21.

The background

In his petition, Sheeran stated that in 1989 he set up a company called the Rockfield Corporation to pursue the development of the hotel and golf resort in County Roscommon. At the time, he was employed as an executive with Chase.

As time went by, the project became more and more demanding on his time, and he had to make a decision whether he should continue his endeavor or bring it to a close. In 1990, he left his full-time employment to become president of the Rockfield Corporation.

“I put all my time and energy into the project, but the obstacles and bureaucracy quickly began to slow the process down,” Sheeran stated in his petition.

“Once architectural designs, feasibility study, environmental impact study and permits were in place, the project was placed before the local government authority for planning approval. Local government approved but the approval was protested on a number of fronts. It took almost 18 months and a considerable amount of money to work through the appeal process. Finally, I overcame all the hurdles in the process. Because of the lapse in time since the original feasibility study, I was obliged to have the feasibility updated, which included all the financial projections.”

Sheeran went on to explain that during this time, hotel operators and golf course designers had to be interviewed and selected, and equity capital and debt financing identified.

“In addition, all the usual business details that surface in a project had to be handled,” Sheeran added. “I visited Ireland several times each year to take care of matters that could not be handled from New York by phone or fax.

Retirement money

“During the period 1990 through 1992, I funded the costs of the Rockfield Corporation from my early retirement package I had received from Chase. The total amount I supplied was $200,000.

“Rockfield Corporation also raised capital through commercial borrowing and through the formation of Rockfield Limited Partnership, which received investment from limited partners.”

Sheeran continued: The objections on the planning approval in Ireland combined with the redoing of the feasibility studies became very expensive. The cost of handling day-to-day operations continued to increase while my consulting salary was fixed.

“As the funds from my retirement package were depleted, I began utilizing lines of credit on various credit cards and lines of credit accounts. First it was $1,000 a month, then $2,000, and so on. But the amount borrowed on these lines of credit began to rapidly increase the monthly debt. These funds were used in the continuing but ultimately fruitless effort to keep Rockfield Corporation going.

“By March 1994, I was deeply in debt as a result of the amounts I had borrow from credit cards. At that time, I sought credit counseling and was advised to consider bankruptcy. However, due to my strong family ethics and a desire not to abandon my financial responsibilities, I rejected this advice and sought to negotiate reduced payments from my creditors. I also stopped taking further cash advances against the credit cards, which by this time were at or over their limits.”

Difficulties in Ireland

Sheeran, in his petition, said that the project in Ireland ran into numerous difficulties. He said that politicians and the press were beginning to “focus negatively” on it.

His petition continued: “In October 1994, the Irish Tourist Board received new funding from Brussels. As part of the process, it adopted a new application which he was obliged to complete and submit. Six months later, the tourist board hired a consultant to study his request.

“In November 1995, the consultant submitted his report,” according to Sheeran in his petition. He said that in February 1996, the tourist board hired another consultant to restudy his application.

“Following a number of ‘bumpy meetings,’ the tourist board approved a $7 million grant subject to a long list of conditions. In the final analysis, this had the same effect as a disapproval because some of the conditions could not be satisfied. I tried unsuccessfully to negotiate changes to some of the conditions.”

Sheeran’s petition states that during this period, he tried desperately to move the project forward and, in an effort to do so, Rockfield Corporation borrowed additional money from the Irish bank and the local development corporation.

“In each instance, I was obliged to personally guarantee the loans,” Sheeran stated.

He added that in January 1997, the Irish tourist board “withdrew its approval in principle.”

“I tried to restructure the project, but without government grants, the numbers could not work and potential investors had no further interest,” he stated.

“Following the Irish tourist board’s withdrawal of approval, the hotel-golf course project was no longer viable. Rockfield Corporation had spent all of the funds it had raised and was deeply in debt. In addition, the lenders on the loans to Rockfield corporation which I had guaranteed were demanding I personally replay the loans.

“The debts which I incurred were an honest attempt to pursue a legitimate commercial economic opportunity. Unfortunately the project did not succeed,” the petition concluded.

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