Suppliers become the latest casualties of banks' war
If a week is a long time in politics, it's probably a lot longer in business. When it emerged last week that the Cork-based Musgrave group had agreed to buy an ailing Superquinn, it should have provided one of life's easy PR lessons. Instead, it descended into a major fire-fighting exercise amid a fusillade of recrimination, objections, legal rows and resignation.
That Musgrave had managed to step into the breach to buy a Irish retail icon when the alternative would have been either collapse or, God forbid it -- a takeover by dastardly British rivals -- was welcomed as the positive within a negative. Musgrave, which controls the SuperValu and Centra brands here, was the knight in shining armour. Or so it seemed.
But it quickly emerged that many Superquinn suppliers were being shafted by receivers from KPMG appointed by the banks. They were going to be done out of about €25m, putting many of them on the very brink of extinction.
There was reasonable speculation that banks -- National Irish Bank, Bank of Ireland and AIB -- had known exactly when to pounce on Superquinn in order to ensure the maximum amount of cash was in the kitty as the receivers went in. That the banks wouldn't have known this would be unthinkable.
Many cheques sent out to suppliers last Friday week will be as useful as a bouncy castle during the Crusades.
For many, the amounts they'll lose may seem relatively small in the scheme of a €200m-plus takeover deal -- €4,000, €35,000 and so on -- but the lack of it could have crippling consequences for businesses.
Those cheques that bounced last week would have paid wages, bought raw materials and kept firms afloat in the short-term. Now their future is uncertain. They'll receive money for goods they sold to Superquinn from last Monday, but won't necessarily be paid for deliveries made prior to that.
Other suppliers -- larger ones in the main -- were rolled out in support of the receivership process and the agreed acquisition. But even as Superquinn boss Andrew Street resigned and two directors went to court to oppose the receivership, it was the response by Musgrave, or the lack of it, really, that served to further sour the pot last week.
Its chief executive, Chris Martin, said that while he was concerned about suppliers in difficulty, it was effectively nothing to do with him if they didn't get paid. They'd have to look to the receivers and grab what they could.
Technically, of course, he's absolutely correct. But Musgrave is getting a pretty attractive deal if it succeeds in taking over Superquinn with no debt attached. Letting suppliers be screwed in the process seemed somewhat at odds with Musgrave's own charter of commitment to community enterprise.
That the group does indeed support local businesses across Ireland is without doubt. In buying Superquinn, it has the chance to show just how much.
And yesterday afternoon, Musgrave finally appeared to have acknowledged the true gravity of the situation for many suppliers. It said that while it still didn't own Superquinn, it had launched an initiative whereby Superquinn suppliers facing difficulties could contact a dedicated Musgrave team, outlining their positions.
Small Superquinn suppliers will also be granted access to Musgrave's SuperValu, Centra and Daybreak network.
But herein also lies the ongoing question of Ireland's banking system and the continuing fallout for businesses across the country. Developers over-extended themselves, backed by banks, in what was effectively a failed property deal.
The business struggles, the banks get edgy, muscle in to get as much of their money back as possible and potentially leave an alternative trail of destruction behind them -- with many of the casualties their own clients. The vicious circle will need to be broken before it breaks what's left.
Maeve Dineen is on leave