Clerys concesssion holders to get €654,000
THE High Court has directed the joint liquidators of OCS Operations Ltd - former operators of Clerys in Dublin - pay out some €654,000 to about 50 concession holders at the department store.
It was also claimed by a lawyer for one concession holder that the method used by OCS to reimburse the concession holders was "a type of Ponzi scheme".
Jeremiah Healy SC, for LS Catering, a company which operated a restaurant in Clerys from 1992, said the OCS had engaged a payment system where all trade receipts, including concessionaires receipts, were lodged into one bank account and from which all payments by the company were made.
Counsel said it appeared that the company used monies from the concession holders sales for its own purposes.
OCS appeared to have "hijacked" concession holder's funds "over a period of weeks if not months."
The system where concession holders "were paid for this week's sales with last weeks proceeds" was effectively "a Ponzi scheme," counsel said.
His client, who is owed some €46,000, was a victim of a most serious "breach of trust," counsel added.
The court heard an estimated €1.4m is owed to the 50 concession holders.
The liquidators sought directions from the court including whether the concession holders have a valid trust claim to funds held in the bank account of OCS Operations, in cash, or in credit card receipts at the date of the liquidation.
Liquidators Kieran Wallace and Eamonn Richardson of KPMG, had opposed a request from Mr Healy for an adjournment to allow further talks with the liquidators.
The court was asked to make orders allowing the liquidators make payments to the concession holders.
Mr Justice Donald Binchy said he was satisfied to make the directions sought.
The liquidator's application was supported by lawyers representing 18 other concession holders, who are due to receive €387,000. No party formally objected to the application.
The Judge also granted LS Catering permission to sue OCS for damages for alleged breach of trust.
Until its liquidation last June, OCS Operations Ltd had operated Clerys Department Store and Warehouse since 2012.
The company's creditors included inter-company loans of some €5.8m owed to other firms in the OCS group of companies; some €1.4m to concession holders; €613,000 to trade creditors and €472,000 to Dublin City Council in commercial rates.