THE examiner of Bell Lines Ltd, appointed yesterday, told the High Court he was about to enter into an agreement to enable cash to be provided so that the company could discharge essential liabilities as they arose during the examinership.
Mr Justice Shanley appointed Dublin accountant, Mr David Hughes, as examiner to Bell Lines Ltd and four related companies. He was appointed earlier this month as interim examiner.
The judge said Mr Hughes was concerned for the court to know he was about to enter into an agreement for the funding of the company during the period when the company was under the protection of the court.
Mr Hughes, in an affidavit, said the agreement was designed to enable cash to be provided so the company could discharge essential liabilities as they arose during the examinership.
The overall effect of the agreement was that the present secured indebtedness of the company to the banks would be discharged and the debts sold to AIB Commercial Services (AIBSC) to provide new cash to the company with Bell shareholders support as to £2 million.
AIBCS would purchase all of the company's debtors in Ireland, Britain and various other countries in Europe. The bank had agreed to make initial payments in respect of approved debts up to a maximum of £9.5 million. This would enable the company to continue to trade.
The weekly requirements of the company during examinership were estimated at between £600,000 and £700,000.
Mr Hughes said the company would, as it continued to trade, create more debtors which it would sell to AIBCS. The banks, in respect of their present indebtedness, were secured by fixed charges over the company's debts.
AIBCS, because it would own the debts, would be entitled to all proceeds arising out of the realisation of such debts. Mr Hughes recommended the funding agreement.
In his report to the court, Mr Hughes said the initial reaction to the company's application to seek court protection was one of confusion. This was principally due to the scale of operations within the company and that it operated in so many countries.
It now appeared that trading had been stabilised and the company was receiving the continued support of its major customers and suppliers.
Mr Michael Collins SC, for the directors of Bell Lines, said the group of companies employed 636 workers at home and abroad.
In the directors petition to the court, it was stated the company used containers to transport goods and these containers for the most part, were subject to either financial or operating leases.
Although these payments are currently paid up to date, under the term of the financial leases the company owed finance houses about £10 million. It also owed a Dutch bank, Mees Pierson, £4.7 million for borrowings for a crane in Rotterdam.
Ms Grainne Clohessy, counsel for the examiner, said Mr Hughes would like to pay everybody but that would be impossible. He had excluded leasing creditors, and the Waterford and Rotterdam port authorities would not be paid during the examinership.
Mr Alan Gordon, a director of Lombard and Ulster Bank, in an affidavit said the Nat West Group (of which Lombard and Ulster is a subsidiary) was the largest creditor of Bell Lines which by way of leases had provided goods containers to Bell Lines. Mr Denis McDonald, counsel for Lombard and Ulster Bank, said his clients were not opposing the examinership but asking the court to impose as a condition that his clients should be paid any liability which fell due during the course of the examinership.
The funding arrangement being put in place was to the particular detriment off his clients. The examiner had indicated he intended to use the containers belonging to his (Mr McDonald's) clients but not to make any payment for them during the examinership.
It appeared everyone else would be paid, along with Waterford and Rotterdam port authorities.
Mr Justice Shanley said he was not giving any direction on Mr McDonald's application at this time. There would be a time when Mr McDonald's concerns could be met.
