An independent accountant’s report shows that bakery Irish Pride, which is shortly due to be sold out of receivership, could have been saved through an examinership before its secured creditor took control of it last summer.
Invoice discounter Close Brothers Finance, which was owed €6 million, placed Irish Pride in receivership in June and its debt was subsequently sold to US firm Gores, which appointed Kieran Wallace, who agreed a deal with rival, Pat the Baker.
A report by Tom O'Brien of Mazars, prepared ahead of a possible examinership, shows that this option could have resulted in the rescue of the business, albeit on certain conditions, including the closure of Irish Pride's Ballinrobe, Co Mayo facility, which is closing.
Owners WHW Bakers, controlled by the Lloyd family, weighed a number of options for the business in the run up to the receivership, including asking the High Court to appoint an examiner, which would have had the effect of giving the company protection from its creditors.
However, the examinership would have required the support of Close Brothers, whose invoice discounting agreement with Irish Pride gave it control over the company’s future cash flows, which would have been needed during the process.
The report says that the directors were confident of securing the support of trade suppliers for the examinership and that the company would have continued paying them. That group of creditors received nothing from the receivership.
It is understood that in in the months ahead of the receivership, Close Brothers increased its retentions from €5.2 million to €6.2 million. The finance house was entitled to to do this, but it had the impact of limiting Irish Pride’s cash flow.
Accounts prepared by Mazars show that Irish Pride lost €1.15 million before tax in the first four months of the year. This was due to the company cutting its selling price to allow it compete on supermarket shelves.
Its main facility in Co Wexford survived the receivership, but Ballinrobe is closing with the loss of 80 jobs. Its workforce will fall from more than 350 to some 250 overall.
The sale agreed by Mr Wallace with Pat the Baker must first get approval from the Competition Authority before it can proceed. The regulator has yet to rule on the deal.
Investment group, One51, sold Irish Pride in 2014 as part of its restructuring. WHW Bakeries, supported by Close Brothers, bought the company for €6.75 million. The agreement included an earn-out clause.
Irish Pride was established in 1989 through the amalgamation of a series of independent bakeries in response to the consolidation of the industry. Close Brothers did not comment.
