Directors of Superquinn have clashed in the High Court about whether a formal decision was made to apply for examinership shortly before receivers were appointed to the retail chain.
Ms Justice Mary Finlay Geoghegan today began a hearing to decide whether, at a meeting held at the offices of Spain Courtney Doyle in Dublin on July 18th last, the company made a valid resolution to petition the court for appointment of an examiner. Two directors have claimed such a resolution was passed while another disputes that.
Kieran Ryan, a chartered accountant who became a director of Superquinn on July 18th last, and David Courtney, said they and Simon Cantrell had formally and “unanimously agreed” to seek to have an examiner appointed to the company hours before Bank of Ireland appointed joint receivers to it. Mr Cantrell said such a course of action was never agreed by him.
In addition to deciding whether there was a valid resolution to bring the examinership petition, the judge must also decide whether that petition was brought within the three-day period stipulated under the Companies Act.
The outcome of the judge’s decision on those and other issues will determine if the hearing of the petition proceeds on Thursday as provisionally scheduled.
If the court decides the examinership petition can be heard, that petition will be opposed by the receivers, Musgraves Group, which claims it has binding contracts to buy Superquinn, and a syndicate of bank creditors.
Today, Mr Ryan told the court he attended a meeting after 3pm on July 18th with Mr Courtney, Mr Cantrell, and two shareholders of Superquinn - Bernard Doyle and Terry Sweeney - to discuss the company’s situation. Earlier that day, Superquinn had been served with letters of demand from Bank of Ireland.
Mr Ryan said he and the other two directors agreed unanimously to apply for examinership. Mr Cantrell also effectively told the other directors they would have to go ahead with the examinership process as he did not want to get involved but did not express any opposition to the examinership application, he said.
All three directors later attended at the offices of a solicitor who had been advising the firm on the process of examinership and that process was discussed, Mr Ryan said. He agreed with Brian O’Moore SC, for the receivers, the solicitors were not informed a decision had been taken at the meeting to apply for examinership. Another firm was engaged to make that application.
The first he knew of Mr Cantrell’s objection to the petition for an examiner was in an affidavit given to the company’s lawyers, he said.
Mr Ryan said the company was preparing to apply for examinership three to fours months earlier, in anticipation the banks might move to appoint a receiver. On the evening of the July 18th, a representative of BOI had contacted him asking the board of directors to invite the appointment of a receiver. The company declined but the receiver was put in place by the bank.
That step was unnecessary as an oral agreement had been made with an international investor to put money into Superquinn, the court heard.
Mr Courtney told the court all three directors agreed to apply for examinership. Cross-examined by Aidan Redmond SC, for Mr Cantrell, he said it was clear from the meeting a decision was taken to proceed with the application for an examiner but he believed Mr Cantrell subsequently changed his mind.
In their evidence, Mr Sweeney and Mr Doyle both said they were at the meeting of July 18th. While they did not participate in the directors’ vote, both said their recollection was all three directors to petition for examinership.
Cross-examined by Lyndon MacCann SC, for the petitioners, Mr Cantrell denied a decision was taken by the board to seek the appointment of an examiner at the July 18th meeting. That was an informal gathering to discuss the situation the company found itself in, he said.
While accepting examinership was discussed, he said there was “no resolution” on a petition. He did not see the point of Superquinn going into examinership as it was “too little, too late”. He accepted directors owed a duty of care to Superquinn and its employees and said he did not want to see the company “torn asunder”.
Mr Cantrell denied counsel’s suggestion he initially agreed to enter the examination process but changed his mind after a receiver was appointed. The services of an accountant and a firm of solicitors to advise on examinership were engaged last April at a cost of €100,000, he said. He worked for months on the examinership process and had asked for information about a potential investor but was not given any, he added.
The hearing continues tomorrow.