Dunnes pays €21.6m debt to avoid bid to wind up chain
Published 14/12/2012 | 11:14
A PETITION to wind-up retail giant Dunnes Stores has been withdrawn at the Commercial Court because the company has paid some €21.6m owed by it for a shopping centre development in Kilkenny.
The National Assets Management Agency had authorised Holtglen Ltd, which is insolvent with loans gone into NAMA, to bring the petition after Dunnes failed to pay despite an arbitration award against it.
Holtglen claimed its insolvency arose from the non-payment but Dunnes said it was unwilling to pay on several grounds including its concerns about the viability of the centre at Ferrybank, Kilkenny.
When the matter came before Mr Justice Peter Kelly today, he was told by Maurice Collins SC, for Holtglen, he was seeking to withdraw the petition as Dunes had paid the money owed yesterday evening.
The money should have been paid sooner, there was "no excuse" why it was not, and while his side regretted having to bring the petition, it had to do so to achieve compliance, he said.
Brian O'Moore SC, for Dunnes, said the court was aware of the reasons why the monies were not paid. Those reasons may be good or bad but they were "genuinely held", he said.
Mr O'Moore added he had express instructions that Dunnes had intended no discourtesy to the court.
Mr Justice Kelly said he was glad to hear counsel say that because, on one view, the failure to pay could be regarded as a challenge to the court's authority.
The matter was not so simple as the petition was for the benefit of all creditors of Dunnes, he added, and directed any other creditors be called. There was no appearance by any other creditor and Mr Collins said none had indicated an intention to appear.
The judge said there could have been no answer to the winding up petition in the circumstances of this case but, as the debt had been discharged last evening, Holtglen was seeking to withdraw the petition and he would permit it do so.
He was also told the issue of legal costs had been agreed between the parties.
Dunnes, an employer of 18,000 people, had previously said it is "robustly solvent" but was unwilling to pay the money to Holtglen on several grounds including its concerns about the viability of the centre at Ferrybank.
In strongly worded letters to NAMA CEO Brendan McDonagh, Dunnes chief Margaret Heffernan described the Ferrybank centre as "an unmitigated disaster". 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 30 last warning, unless Dunnes paid €21.6m to Holtglen within seven days, Holtglen would petition to wind up Dunnes on grounds it was unable to pay its debts and/or it was just and equitable that it be wound up.
It was contended Dunnes has deliberately decided not to pay despite asserting it has capacity to pay and that planning issues raised by Mrs Heffernan about the development were "just thought up".
Mr Justice Kelly had remarked, as 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 has a defence to payment.
Last March, Mr Justice Kelly granted summary judgment for €20.4m to Holtglen against Dunnes after upholding an arbitrator's award to Holtglen arising from a 2007 agreement to build the centre for €37m.
Dunnes said it had to date paid some €18m for the centre on foot of the 2007 agreement for construction of the development for some €37m.
In correspondence, it indicated it would pay another €7.5m and transfer its rights in the centre to NAMA if that was accepted as the end of its obligations.
Last September, Holtglen served a notice under Section 214 of the Companies Act on Dunnes. Section 214 provides, where judgment has been obtained against a limited company and the debt is not paid within 21 days of the notice, a petition can be presented seeking to have the company wound up.
In letters to Mr McDonagh this month, Mrs Heffernan accused NAMA of failing to address any of the "substantial" issues raised by Dunnes concerning the centre and said a report prepared by a planning consultant for Dunnes expressed the view the centre was not compliant with planning permission.
In reply, Mr McDonagh insisted Dunnes must pay the €21.6m to Holtglen before NAMA would engage in any talks about the operation of the Ferrybank development. NAMA Chairman Frank Daly also told Mrs Heffernan in letters he did not agree the centre was not commercially viable. Dunnes' failure as anchor tenant to fit out and open its anchor store had adversely affected the reputation of the centre and of Holtglen, he said.