A High Court judge has continued court protection for four companies in Galway businessman John Sweeney’s Black Shore group which owns or operates a number of Esso service stations, Spar stores and the Courtyard Marriott Hotel in Galway.
One of the factors which persuaded him towards examinership rather than receivership was the Courtyard Marriott was “bucking the trend” in performing quite well with Fáilte Ireland expressing the view this was due to the management style of Mr Sweeney and his employees, Mr Justice Brian McGovern said. This would change in a receivership where Mr Sweeney would lose effective control, he added.
Anglo Irish Bank, owed more than €20 million arising from inter-company guarantees involving three of the companies, had strongly opposed examinership on grounds including its “irretrievable” loss of confidence in Mr Sweeney.
The bank has said it intends to appoint a receiver over the companies as soon as it can. Court protection applies for a maximum 100 days.
In his judgment today, Mr Justice McGovern said he was satisfied an independent accountant had provided evidence to show the companies have a reasonable prospect of survival if certain specified conditions, including securing investment, were met. The court had heard some six expressions of interest had been received from potential investors.
The accountant’s view was also supported by interim examiner Michael McAteer, the judge noted.
Rejecting arguments by Anglo that it made little difference whether a receiver was put in by the Bank or an examiner was appointed, the judge said it was well established the purpose of examinership was to enable enterprises continue in existence for the benefit of the economy as a whole and must also take into account several matters, including preservation of jobs.
The primary responsibility of a receiver, on the other hand, was to protect the interests of the security holders and realise the charged assets for their benefit, he said.
When an examiner later puts survival proposals forward for court approval, the court must be satisfied the proposals are fair and equitable in relation to any class of creditors who have not accepted them and whose interest would be impaired, he said.
Such proposals must also not be unfairly prejudicial to any interested party. Anglo was entitled to object to any survival proposals put before the court by the examiner.
At this stage, the judge was satisfied there was a reasonable prospect of survival of the four companies and he should exercise his discretion in favour of confirming the appointment of Mr McAteer as examiner of the four companies, he concluded.
