Dunnes Stores faces a petition for winding up over its failure to honour a €21.6 million court judgment.

The summary judgment, granted last March by Mr Justice Peter Kelly, relates to the retail group’s alleged failure to settle a debt for building works at a shopping centre in Kilkenny.

On Monday, insolvent construction group Holtglen Ltd will present the winding-up petition in a case listed before the Commercial Court.

Holtglen built a shopping centre in Kilkenny in which Dunnes agreed to be the anchor tenant. The Ferrybank shopping centre was completed in 2009 but Holtglen later became insolvent and its Bank of Ireland loans were transferred to National Asset Management Ltd (NALM), a company of the National Asset Management Agency.

It is understood Nama wrote to Dunnes on October 30th last warning that unless Dunnes paid some €21.6 million (the €20.4 million judgment plus interest) within seven days, Holtglen would proceed to publish a petition to wind up Dunnes on grounds it is unable to pay its debts and/or it is just and equitable that it be wound up.

Holtglen claims there is no justification for Dunnes not paying the sum due.

Last March Mr Justice Kelly granted summary judgment for some €20.4 million to Holtglen against Dunnes after he dismissed Dunnes’ application to set aside an arbitrator’s award for €20.2 million to Holtglen arising from an agreement to build the centre.

Holtglen claims, despite the summary judgment order, Dunnes has still not paid and now owes it some €21.6 million. Last September it served a notice under section 214 of the Companies Act on Dunnes.

Section 214 provides, where judgment has been obtained against a limited company, a notice can be issued threatening to wind up that company. If the debt is not paid within 21 days, a petition can be presented to the court seeking to have the company wound up.

On November 9th last a petition was issued.

Previously the Commercial Court heard Dunnes had instituted arbitration proceedings claiming breaches of a development agreement by Holtglen, which in turn counterclaimed for payment. Holtglen claimed it was then entitled to staged payments due under the development agreement, plus other sums for which it had counterclaimed.

It said it has very large borrowings in connection with the Ferrybank development and it was “of the utmost importance” it was paid by Dunnes as soon as possible. Holtglen later became insolvent.

In October 2011 the arbitrator, while upholding some of Dunnes’ complaints of breaches of the development agreement, found Holtglen had remedied those matters and Dunnes was not entitled to terminate the development agreement.