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Sun sets over McDonagh's Claddagh
Jon Ihle



JUST three years ago, Galway businessman Pat McDonagh was on the shortlist for the Ernst & Young entrepreneur of the year award for making the leap across the Atlantic and setting up the Claddagh Irish Pub chain with American business partner Kevin Blair.

But today it seems the Supermac's owner's success extends only as far west as his burger joint on Inis Mor.

After a bruising law suit between the two founders and a bankruptcy reorganisation last year, Claddagh returned a 15m write-off to Supermac's over 2005 and 2006 due to "adverse performance". The 11m charge from 2005 alone was nearly half the turnover for the Irish business that year.

So if the colonel can sell KFC in Cavan, why couldn't Pat McDonagh sell Irish pubs in Kentucky?

By the end of 2004, Supermac's had put over 21m into Claddagh's 16 outlets . . . suburban strip-mall hybrids of TGI Friday's crossed with a Galway shebeen . . . and Supermac's was coining it. The company recorded a 140% profit rise to 4m. Claddagh had sales $55m that year.

The partnership between the Irish fast food entrepreneur and the American manager appeared to be golden.

But the worst was to come.

The rapid expansion of the Ohiobased chain, which was founded only in 2001, was funded by McDonagh's money and US bank loans. In 2004, McDonagh sought a repayment schedule from Blair, a former Supermac's operations manager, on a $21m loan he said he had extended the American business. But by the end of that year, Blair was having trouble meeting creditors' demands and sought more financial help from McDonagh, who was reluctant to give it.

The dispute escalated to a court case in which McDonagh argued that he should be paid back and Blair asserted that McDonagh was an investor who should be forced to sell his share of the company, as he was failing to support it adequately with a new line of credit.

While these disputes were under way, unpaid Claddagh creditors began circling and a group of them filed bankruptcy proceedings which alleged Blair was misappropriating funds from the business to buy luxury cars and make donations to his alma mater, Ohio State University, among other things.

Eventually an Ohio court appointed a trustee to the bankrupt company who removed Blair as chief executive after Blair lost his suit and was forced to repay the $21m loan as well as $2m in damages to McDonagh.

Supermac's lost 4.55m in 2005, but returned a 2.78m profit in 2006.

Ironically, McDonagh is reportedly considering buying Claddagh outright as part of a compromise on the millions he is owed.




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