Sony Music Entertainment Ltd has secured the appointment of an interim examiner by the High Court to the Golden Disc music retail group, which has 20 stores around the country, including six franchised stores.
Sony, of Baggot Street, Dublin, said it is owed some €1.38 million by Golden Discs and is not prepared to continue providing supplies in the absence of court protection.
Golden Disc's financial adviser had informed Sony the group's total liabilities amount to some €9.5 million and that it was insolvent and had proposed a voluntary scheme of arrangement for creditors, the court heard.
Sony said it believes, if certain measures are put into effect including the closure of loss-making stores, that Golden Discs has a reasonable prospect of survival as a going concern. It understood eight of the stores operated by the company are operating profitably while four of the six franchised stores are also operating profitably.
On the application of Lyndon MacCann SC, for Sony, this evening, Mr Justice Roderick Murphy said he would appoint Michael McAteer of Grant Thornton as interim examiner and he fixed the hearing date for the petition for examinership for February 23rd.
In its petition, Sony said it believes it supplies some 30 per cent of Golden Disc's music products and is one of the largest unsecured creditors of the company. Because of certain circumstances, it had not supplied product since February 2nd last.
On February 2nd, Sony said it met with Stephen Fitzgerald, managing director of Golden Disco, who advised the purpose of the meeting was to propose a voluntary or informal scheme of arrangement with the company's creditors.
A financial adviser to Golden Disc had advised the company was now insolvent and, of its 20 stores, six were making losses. The six loss-making stores were said to be at St Stephen's Green, Dublin; Mary Street, Dublin; Jervis Street, Dublin; Stillorgan, Dublin; Jetlands Shopping Centre, Limerick; and Maynooth, Kildare.
Sony said it was also informed Golden Disc would not be able to pay sums then due to Sony of €1.131 million or another sum of €249,090 due at the end of this month.
The financial adviser said he believed the insolvency was due to significant rent increases across several stores, especially Dublin city centre stores, but negotiations in an effort to reduce rents had not proven successful.
Sony said a voluntary scheme of arrangement with the company's creditors was proposed on the basis all major creditors would be paid some 35-40 per cent of sums due with the balance being written down. It was stated all major creditors would have to agree to this for the scheme of arrangement to be successful.
The adviser indicated Golden Disc was not anxious to apply for court protection given the expense of that and impact it might have on the company's goodwill but it would do so immediately if the creditors did not accept the proposals.
Sony said it had asked for financial information before considering the proposed voluntary scheme of arrangement but that information had not been forthcoming as of the date of the petition and it had only received a list of current stock supplied by Sony to the company. In those circumstances, Sony was bringing the petition.
