Most of the 583 people employed full and part-time at Xtra-vision stores will lose their jobs following the appointment of a provisional liquidator to the movie rental chain, the High Court has heard.
The company’s declining revenues were affected by technology improvements in online streaming along with illegal downloading and piracy of movies and it had “no option” but to seek liquidation, the court was told.
The company’s owners, Oxtermont Ltd, part of the UK-based Hilco Capital, petitioned the court to appoint Michael McAteer, of Grant Thornton Ireland, as provisional liquidator of Xtra-Vision Entertainment Ltd.
That company operates more than 80 outlets in Ireland.
The judge also appointeed Mr McAteer as provisional liquidator to a related company, Xtra-Vision Ireland Ltd, which owns the stock.
Mr Justice Paul Gilligan granted the petition after being told the firms are insolvent and unable to pay their debts as they fall due.
It was “unfortunate” the company is no longer viable, the judge said.
Edward Farrelly BL, for the company, said the irreversible decline in the movie rental market was the main reason for the petition. The company sustained a “very significant” decline in 2015 revenues, down more than €12.4 million from the previous year.
Orderly winding up
The appointment of a provisional liquidator, who would secure the companies’ assets, would aid an orderly winding up, counsel said.
While positions for some employees could be found at related companies such as the HMV chain, it was unfortunately expected that the bulk of Xtra-vision’s employees would lose their jobs, he said.
Any gift vouchers issued by the company will be honoured, he added.
Counsel said the business has been in existence 30 years and the current owners acquired it in 2013 from receivers. The owners are part of the Hilco Capital group, which specalises in corporate restructuring.
It was always accepted the the movie rental business is a “sunset industry” particularly with increased popularity of movies being digitally streamed on-line or broadcast on satellite TV, Mr Farrelly said.
It was hoped, in the declining market, losses could be mitigated and Xtra-vision would return to profitability for a few years.
The company had made a profit in 2013 and 2014 but, in 2015, and especially during the last six months, experienced a “drastic” decline in revenues, counsel said. This was exacerbated by technology improvements in on line streaming as well as illegal downloading and piracy of movies, counsel added.
Turnover down
Its turnover for last year was down by €12.4 million from the previous year and Xtra-vision made a loss of €2.5 million in 2015, counsel said.
The owners believed the decline was “irreversible” and the company would continue to suffer significant losses in 2016. The business had been funded via loans from a related firm within the group and the owners’ decision not to continue support any longer resulted in cash flow difficulties.
That lead to the company passing a special resolution to go into liquidation. The company could not pay its debts as they fall due, including wages and monies owed to Revenue, and had “no option” other than liquidation.
The matter will return before the court next month.
