The High Court yesterday appointed a provisional liquidator to Navan Carpets, which employs 200 people. Mr Justice Kearns was told the company was insolvent and the workers would lose their jobs.
The appointment of Mr David Hughes, a chartered accountant of Ernst and Young, as provisional liquidator, was sought by Mr Mark Sanfey, for the directors of the company, and was granted by the judge.
In an affidavit, Mr Patrick Ryan, managing director of Navan Carpets Ltd, said the members of the company and its board of directors had taken the view that the company could not continue to trade and there was no possibility of restructuring it to enable it to attain profitability.
He said the company was beneficially owned by Navan Carpets Group Ltd, a non-trading holding company. All grants and investment capital - such as that contributed to the group over the years by Coats plc and Enterprise Ireland - had been used to fund the company, which currently owed some € 3.7 million to the group.
On June 4th last, a meeting of the group's directors had considered a number of options for the company's future, as set out in a report by independent consultants Liberty Business Performance Improvements Limited.
It was decided to approach Enterprise Ireland to ask it to reschedule payment of preference shares and to approve the pledging or sale of fixed assets.
It was also noted that the company did not have a viable manufacturing future and the question before the board was whether or not to appoint a liquidator or examiner at that time.
The directors believed any restructuring of the company would require the agreement of Enterprise Ireland and Coats plc to defer payments due to them by the group so that the group could, in turn, defer repayments due to it of loans outstanding.
However, on June 17th, Enterprise Ireland had informed the company that, as it was proposing to stop manufacturing, all grants and preference shares would, where there was liability, be revoked and become repayable. In those circumstances, the directors of the company and of the group took the view there was no alternative but to appoint a liquidator. At an emergency general meeting on June 27th, the members of the company resolved that the company be wound up.
The directors also considered it necessary for the provisional liquidator to be appointed to ensure the employees were properly apprised of their entitlements. It was expected the sale of assets would cover the employees' statutory entitlements.