Saturday 19 October 2019

'Hopelessly insolvent' firm has hazardous chemicals stock

€9.5m

Avara Shannon Pharmaceutical Services Ltd was hopelessly insolvent, loss-making to the tune of €9.5m per year and is unable to pay its employees, the court was told. Stock picture
Avara Shannon Pharmaceutical Services Ltd was hopelessly insolvent, loss-making to the tune of €9.5m per year and is unable to pay its employees, the court was told. Stock picture

Tim Healy

The High Court has made orders winding up a Co Clare-based pharmaceutical company that employs more than 100 people.

Avara Shannon Pharmaceutical Services Ltd was hopelessly insolvent, loss-making to the tune of €9.5m per year and is unable to pay its employees, the court was told.

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The company which is part of the Avara Pharma Group, manufactures chemicals, namely active ingredients in medicines, for the pharmaceutical industry.

On Thursday, Ms Justice Leonie Reynolds said she was satisfied to appointed KPMG's Shane McCarthy and London-based insolvency practitioner Edwin Kirker as joint provisional liquidators to the company, which operates a 2000sq metre facility in Shannon Industrial Estate.

The application to have the firm wound up was brought by the company itself. Rossa Fanning SC, appearing with Ross Gorman BL for Avara said the situation was "bleak", but there remained some hope that a buyer could be found.

Since the business was acquired for €1 in 2016 from UCB Manufacturing Ltd, Avara had hoped it would be able to generate new business, but that had not materialised.

Counsel said that at the time of the sale the company and UCB entered into a supply agreement where Avara would make Ritogotine - used to treat Parkinson's disease - for UCB at a reduced price.

UCB also contributed to Avara's overheads for a period of two years, in the hope the company would be profitable after the two-year period.

Avara broke even between 2016 and 2018, but since then had been loss-making,.

Counsel said the Avara group had been supporting the company financially, to the tune of €16m, but could no longer afford to do this.

It sought to find a buyer, but that had not been possible. The company had considered liquidation in April.

It decided against that option in order to convert €3m worth of active ingredients into finished goods that otherwise would have been worthless.

That decision meant the company traded profitably between April and the end of June, counsel said, but the overall picture was poor, and the firm is hopelessly insolvent.

The company did not have the funds to pay money sought by the employees.

In talks with the company, employees representatives had informed Avara that they expected their TUPE rights, being 6.5 weeks pay totalling €16m, to be honoured.

The issue had been before the WRC and the Labour Court, but the company says it cannot pay the level sought. As a result, all of the 115 employees had voted for strike action.

Counsel said an important reason for seeking the appointment of joint provisional liquidators was the quantity of hazardous materials stored on site.

The Judge appointed the joint provisional liquidators, granting them certain powers, made the matter returnable to a date later this month.

Irish Independent

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