Business Irish

Friday 23 February 2018

Proposed winding up of franchise shop is a 'ruse', court hears

Tim Healy

A PROPOSAL to wind up a shop business was simply "a ruse" to get out of a five-year franchise agreement with Londis, a court heard yesterday.

The operators of the Meath store, which traded under the Londis name, have been ordered by the High Court to continue buying their supplies from Londis pending a hearing over whether they were in breach of their franchise agreement.

The court refused, however, to grant an injunction restraining Partridge Ltd, and its directors Desmond and David Smyth, from holding a meeting today.

A resolution is expected to be put to creditors to wind up the company, which operated the store on the Derry Road in Slane.

ADM Londis plc sought injunctions against the three defendants, claiming the proposed winding up was an attempt to get out of the franchise agreement started in December 2009 -- but the defendants would continue trading through another, unnamed company.

Mr Justice Roderick Murphy said he was satisfied the defendants had not revealed the full extent of their financial affairs to the court.

There was only a reference in an affidavit that the company was incapable of paying its debts but no statement of affairs had been provided to the court, he said.

Earlier, Angus Buttanshaw BL, for Londis, said the accounts for the business showed the store was "perfectly profitable" but a decision had been made to no longer honour the franchise agreement and put the company into liquidation. His clients had been informed by the defendants that they had "ceased trading" on June 25.

But when a Londis regional manager called to the shop earlier this month, it was still open.

Martin Hayden SC, for the defendants, urged the judge not to grant an injunction because if the court finds with Londis at the full hearing of the matter, damages would be an adequate remedy.

He also said the accounts referred to by Mr Buttanshaw were only draft accounts and did not include a number of important liabilities.

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