The High Court yesterday appointed a provisional liquidator to a Co Kildare grain merchant that employs 40 people and is alleged to have liabilities of more than £20 million (#25.39 million). The judge made his decision after hearing submissions yesterday on behalf of Edward Kavanagh (Maynooth), Manor Mills, Maynooth, and some of its creditors. More than 30 creditors supported an application for appointment of a provisional liquidator while the company argued the court should first have an opportunity to put a scheme of arrangement before creditors.
Mr James Connolly SC, for the company, said there would be no dissipation of the assets of the company. The appointment of a provisional liquidator would only reduce the funds available to creditors and it would take longer for creditors to be paid. He said the company expected creditors would get 65p in the pound if the scheme of arrangement was adopted, while they would get 50p if a provisional liquidator was appointed. He accepted the company was insolvent.
In an affidavit, Mr Edward Kavanagh, a director of the company, said its problems had arisen through a recession in the pig and poultry industries that began last year and had worsened since. Mr John O'Donnell SC, for Quinns of Baltinglass, Co Wicklow, a supplier of the company which claims to be owed £966,000, yesterday moved the application for appointment of a provisional liquidator.
In affidavits, Mr Liam Quinn, a director of Quinns, said it was clear that Kavanaghs was hopelessly insolvent, with liabilities of more than £20 million. It had assets of £14 million and admitted debtors of £5.5 million. He was aware the company had appointed Mr John McStay, an insolvency expert, as an adviser.
Mr Quinn said he had concerns about the accuracy of many matters set out in the statement of affairs. He was not blaming Mr McStay. He said he was deeply mistrustful of the directors of the company and did not accept creditors would do better under the proposed scheme of arrangement.
In his affidavit, Mr Kavanagh said the company found itself in a situation where it could not increase prices and customers were going out of business or unable to pay their debts. It had tried to sell the goodwill of the business but had proved unsuccessful.
On October 20th last, the board of directors had resolved the company would have to cease trading. Its bank account was frozen last Friday. Mr John Rogers SC said he appeared for Mr James O'Donoghue, a farmer in north Co Dublin, and for the Irish Farmers' Association, which had 45 members whose grain was in the possession of the company. He was asserting retention of title over that grain, which amounted to 10,000 tonnes.
Giving his decision, Mr Justice McCracken said it was essential to satisfy creditors that their interests were protected - and he was saying that without casting any slur on Mr Kavanagh - and he would appoint a provisional liquidator, Mr David M. Hughes of Ernst & Young.
He also directed that meetings of creditors be held within four weeks to vote on the proposed scheme of arrangement.
It is understood the petition for the winding-up of the company will be dealt with following those meetings.
