O'Brien's company goes into liquidation

O'BRIEN'S IRISH Sandwich Bars has been placed in liquidation after a deal to rescue the business from examinership failed.

The company, which operates the franchised O'Brien's sandwich bar chain, went into examinership in July, a move which gave it High Court protection from creditors and a 100-day breathing space to come up with a rescue plan.

The protection period was due to end next week. The examiner, Paul McCann of Grant Thornton, took over yesterday as liquidator. It is understood that he is hoping to sell the business as a going concern.

The move will not affect the chain's individual outlets, as those businesses are owned by the franchisees themselves. There are 85 O'Brien's restaurants in the Republic.

O'Brien's problems are rooted in the fact that it leased many of the outlets from which its franchisees operate, and sublets the premises to them.

A number of outlets closed as the recession took its toll, while slowing business meant others were having difficulty paying their rents. This in turn meant that the company had problems meeting its own liabilities to its landlords.

AIL Investments, backed by businessmen Graeme Beere and Denis Desmond, made an offer to buy the business in the Republic a number of weeks ago.

However, the rescue deal depended on the examiner getting the High Court to "repudiate" the headleases which the company held over its franchised outlets. This would have ended the company's direct relationship with the landlords and meant that the franchisees would have paid their rent directly to them instead of to O'Brien's.

Last week, the High Court refused to repudiate the leases involved. Mr Justice Seán Ryan said that company law did not permit the court to do this on a wholesale basis.

At the hearing, it emerged that 53 of 61 franchisees affected were opposed to the move. Their lawyers told the court that they believed they would be better off if the company was liquidated. The outlets involved employ 450 people.

It is understood that a group of franchisees were behind a bid for the group made while it was in examinership. AIL's bid did not include O'Brien's Northern Irish or British businesses.

Two companies connected with its operations in Britain and Northern Ireland are in administration, but the entity that controls the franchises north of the Border and in Britain has been ringfenced from this process.

Businessman Brody Sweeney, who ran for Fine Gael in the last general election, founded the chain, inspired by visit to Subway during a visit to New York in the 1980s.

He opened the first store 21 years ago. The idea took off as the economy began to grow during the 1990s.

Mr Sweeney also expanded the company beyond Ireland, opening stores in 16 countries, ranging from Canada to Australia.

By 2007, its franchises had a combined turnover of about €140 million a year. The holding company, which owned the brand, had profits of €1.2 million a year.