A €10 MILLION fund is to be established to reimburse certain creditors of Superquinn, the supermarket chain which went into receivership last week.
The joint receivers of the company are expected to announce details of the scheme today. Only suppliers who are not covered by credit insurance will be covered by it.
The scheme will be funded by Musgrave and indirectly through the banks, using money generated during the course of the receivership, and is contingent upon Musgrave’s purchase of Superquinn. The appointment of receivers to the company last week, and a separate petition for examinership brought by directors of the company, is currently being heard in the High Court.
Joint receivers were appointed to Superquinn by a Bank of Ireland-led syndicate of banks last week. Some €275 million was owed to the banks, mainly deriving from Superquinn’s property dealings, while unsecured creditors – mainly suppliers – were owed an estimated €55 million.
According to Musgrave and the receivers who are administering the fund, the €55 million has been significantly reduced due to retention of title, credit insurance, and payments made by the receivers since they took over the company.
As a result the fund will result in trade creditors who are not covered by credit insurance recovering 65-70 per cent of their losses. They argue that this will provide more generous coverage than would be possible through examinership.
The High Court is due to rule tomorrow on whether the application to apply for examinership, which was taken by directors of the company last Thursday should be heard.
The delay in the ruling, which had been expected yesterday, follows yesterday’s detailed cross-examining of Superquinn directors Kieran Ryan, David Courtney and Simon Cantrell, and shareholders Bernard Doyle and Terry Sweeney. Doug Smith, a partner with solicitors firm Eugene F Collins, who was expected to give evidence in support of Mr Cantrell, was not questioned.
The directors and shareholders faced questioning on the validity of the petition for examinership which was made last Thursday, with Mr Ryan and Mr Courtney claiming that a petition to apply for examinership had been unanimously agreed by the three directors at a meeting on July 18th, before the announcement of the receivership that evening. Mr Cantrell rejects this.
Under cross-examination, Mr Ryan said there was a resolution to present the petition at the meeting on July 18th. He said that he, Mr Courtney and Mr Cantrell had “broken off” from a meeting which also included Terry Sweeney and Bernard Doyle and agreed to present the petition for examinership, though Mr Cantrell said he did not want to be involved in the court procedure.
Under questioning, Mr Ryan said that a formal vote had been taken at the meeting.
Cross-examined by Lyndon MacCann SC, for the petitioners, Mr Cantrell denied a decision was taken by the board to seek the appointment of an examiner at the meeting. It was an informal gathering to discuss the situation the company was in, he said.
While accepting that examinership was discussed, he said there was “no resolution” on a petition.
Kieran Ryan told the court that he had been informed on Monday evening that three suppliers of Superquinn – Cadbury, Keelings and a fruit and vegetable supplier – had contacted Superquinn with concerns about the possibility of the company going into receivership, hours before the receivership was officially announced.
