MUSGRAVE’S BID to take over rival Superquinn is under threat after the company and its directors last night asked the High Court to give it protection from its creditors and appoint an examiner in a bid to rescue the troubled retail chain.
The hearing followed Superquinn chief executive Andrew Street’s announcement that he was resigning over the treatment of creditors by receivers appointed to the company by Bank of Ireland and two other lenders.
Musgrave announced it was buying Superquinn on Tuesday morning, hours after Bank of Ireland, AIB and National Irish Bank appointed Kieran Wallace and Eamonn Richardson of KPMG as receivers to the grocery chain.
The company and directors David Courtney, Kieran Ryan and Simon Cantrell, threw a question mark over the deal yesterday when they began High Court proceedings at 5.50pm to have an examiner appointed to the business.
They argue that the appointment of joint receivers “spells the end” of Superquinn’s undertaking and represents a “disaster” for its creditors and employees.
They claim the inevitable outcome of receivership and proposed sale to Musgrave Group plc is likely to be substantial involuntary redundancies and trade creditors – owed about €55 million – being “burned” while the liabilities of the bank are met.
In contrast, they believed examinership would mean an increased likelihood of translating the good core business into long-term sustainable profitability and protect the position of its employees.
Bank of Ireland said it would oppose the position and its lawyer, Brian Kennedy, questioned whether the petition had been brought within the statutory time limit and whether the court should hear it at all.
Once the receivers were appointed, any applications for examinership had to be made within three days. The court heard the receivers were appointed at 6.09pm last Monday and yesterday’s application was moved about 5.50pm.
Ms Justice Mary Finlay Geoghegan has directed a preliminary hearing next Tuesday on whether the company is entitled to present the petition and if the court is entitled to hear it.
Those issues, which will decide whether the company and directors can proceed next Thursday with their application for the appointment of an examiner, would result in the company securing court protection from creditors while it moves to put in place a survival plan.
News of Mr Street’s resignation emerged earlier yesterday. In an e-mail to Superquinn staff, he said it was primarily over the treatment of suppliers.
Mr Street accused the Bank of Ireland-led syndicate of imposing the receivership on Superquinn, and said that the banks chose the process to secure the maximum amount of the sale proceeds for themselves. “This is being done at considerable cost to our suppliers,” he said.
Mr Wallace later described Mr Street’s decision as “regrettable” in light of a commitment he had made earlier in the week to remain with Superquinn.
