Examiner appointed to bookseller employing 49 people
AN examiner has been appointed to a bookseller employing 49 despite a bank's objections related to non-disclosure of matters by the directors of the firm when applying for protection of the High Court.
KBC Bank, which is owed €3.6m, had sought that a receiver rather than an examiner be appointed to Bookfinders Ltd of Galway because of the alleged material non-disclosure.
Ms Justice Caroline Costello ruled an examiner rather than a receiver was in the best interests of everyone concerned with the business despite the failure of the directors in relation to their obligations when they applied for examinership earlier this month.
KBC alleged the directors ommitted the fact that there was a floating charge over the entire company and its assets had been converted into a fixed charge a few days before the petition for examinership was made.
They also omitted the fact that the directors themselves had personally guaranteed the debts of the company to the bank and suggested their (directors's) remuneration had declined in recent years. They had "glossed over" the fact it had in fact increased in 2015 in terms of percentage of turnover, it was claimed.
It was also stated the firm's only secured asset was a premises in the Courtyard Shopping Centre, Letterkenny, Donegal. It had three other shops which it rented.
A valuation of the Courtyard premises was put at around €288,000 when there was a valuation last May putting it at €600,000, KBC said.
Turnover had almost halved from a figure of €8.8m in 2007/8 and the directors stated the excess of liabilities over assets was €2.28m, most of it owed to the bank, the Revenue and trade creditors.
However, in an amendment to information provided, that figure was increased to €3.25m, a difference of around €972,000.
Alan Bundschu, on behalf of the directors, denied there was deliberate non-disclosure. They provided information as best they could given the short amount of time they had to make the examinership application, he said.
Ms Justice Costello accepted the directors breached their obligations under company law in relation to disclosure, including in relation to personal guarantees on the money owed to the bank.
No information had been provided to the court explaining why the erroneous and inaccurate information had been originally provided to the court, or how the errors were discovered, she said.
However, the interim examiner, appointed on November 13, had concluded the company had a reasonable prospect of survival providing certain conditions were met.
The judge particularly noted the examinership had the support of staff, creditors and suppliers and that there had already been an expression of interest in the company from a potential investor.
She therefore confirmed the appointment of Michael McAteer as examiner to come up with a survival scheme for the company.