Dunnes Stores chief Margaret Heffernan has told the National Asset Management Agency it will be held responsible for the “very significant losses” her company will “inevitably” experience if a petition to wind up the retail giant over non-payment of some €21.6 million for a shopping centre development in Kilkenny is pursued.
The petition has been fixed for hearing on December 14th.
Dunnes, which employs 18,000 people, is “robustly solvent” but unwilling to pay the money to Holtglen Ltd (which is insolvent with loans gone into Nama) on several grounds including its concerns about the viability of the centre at Ferrybank, situated outside Waterford city, in Co Kilkenny, the Commercial Court was told by Dunnes counsel, Brian O’Moore SC, yesterday.
In strongly worded letters to Nama chief executive Brendan McDonagh, Ms Heffernan described the Ferrybank centre as “an unmitigated disaster” and the winding-up petition as “an abuse of process”.
‘Extraordinary step’
It cannot be Nama’s belief Dunnes is insolvent and that any petition to wind up Dunnes on grounds of insolvency is justified, she said.
Ms Heffernan said the mere presentation of the petition would damage Dunnes and Ireland as a whole, and advertising the petition will simply exacerbate that harm. Pressing the court to appoint a liquidator to Dunnes was “an extraordinary step” for anybody, particularly a public agency, to take, she added.
Nama wrote to Dunnes on October 30th last warning that, unless Dunnes paid €21.6 million to Holtglen within seven days, Holtglen would petition to wind the group up on grounds that it was unable to pay its debts and/or that it was just and equitable that it be wound up. Yesterday, seeking to have the petition fast-tracked in the Commercial Court, Maurice Collins SC, for Holtglen, said Dunnes had deliberately decided not to pay, despite asserting it had capacity to pay and that was “a novel proposition”.
Planning issues raised by Ms Heffernan about the development were “just thought up” and issues about the centre’s viability were not relevant and subject of separate proceedings, he added.
Mr Justice Peter Kelly agreed to transfer Holtglen’s petition to the Commercial Court. In a situation where Dunnes had not appealed his Commercial Court judgment last March enforcing an arbitrator’s award to Holtglen against Dunnes, it was difficult to see how Dunnes had a defence to payment, he said. He was not determining the issues, the judge stressed.
18,000 jobs
Given the large sum involved, the fact Dunnes is a major employer and that 18,000 jobs would be in jeopardy if a winding up order was made, he said he would fast-track the proceedings and list the petition for hearing on December 14th.
Last March Mr Justice Kelly granted summary judgment for €20.4 million to Holtglen against Dunnes after upholding an arbitrator’s award to Holtglen arising from a 2007 agreement to build the centre for €37 million.
Dunnes says it has to date paid some €18 million for the centre on foot of the 2007 agreement and has indicated in correspondence it will pay another €7.5 million and transfer its rights in the centre to Nama if that is accepted as the end of its obligations.
