THE RECESSION, the loss of a franchise and cashflow problems have forced one of the biggest car rental businesses in the Republic to seek court protection from its creditors.
The High Court this week appointed Grant Thornton partner Michael McAteer as interim examiner to the car rental operations of the Murray group, owner of Esmonde Motors, which has also recently ceased trading.
According to a statement of affairs given to the court, the companies involved are: Murrays Rent-A-Car, which owes creditors €12.6 million; Murray Leasing, which owes €4.1 million; and Murray Chauffeur Drive, which has debts of €1.9 million.
The appointment of an examiner means that a company is under the court’s protection, and creditors cannot seek repayment of their debts. The system is designed to give insolvent companies that have a reasonable chance of survival an opportunity to restructure and trade their way out of difficulty.
The companies still have considerable assets. Murray Rent-A-Car’s actual shortfall is €1.5 million and the chauffeur operation’s deficit is €211,000. The leasing business has a surplus of €293,000.
Other companies within the group, including Esmonde Motors, owe money to these businesses, and it is understood that directors believe these debts can be collected, although it may take time. The biggest of these intercompany debts is €8.5 million owed to Murrays Rent-A-Car.
At the same time, an accountant’s report states that the overall business has begun trading profitably again and expects to generate a surplus of over €550,000 between now and the end of the year. The key difficulty for the company is that much of its financing and loans are short term, while its cashflow is medium and longer term.
According to the accountant’s report, the global recession and a slowdown in tourism, a key market for car rental firms, have hit the sector in general.
Along with this, Murray’s is dealing with a number of specific difficulties. Earlier this year it lost the Europcar rental franchise to a competitor – Irish Car Rentals – after 35 years. It replaced this with German brand Sixt, whose business it had begun developing.
The company has begun restructuring. It wound down a number of non-core activities and cut its workforce by 40 employees. Its cash position has stabilised as a result. However, the report acknowledges that it is unable to service its debts.
The companies’ directors, Harold Thomas Murray and Harold John Murray, will next week follow up Mr McAteer’s interim appointment by asking the court to formally appoint an examiner.
Whoever is appointed will then have up to 100 days to come up with a rescue plan for the company and a settlement deal for creditors.
The Murray group has been in business since 1948 and is the longest-established car rental company in the Republic. It has a headquarters in Dublin, with six branches around the State, and employs 102 people.
