Saturday 18 November 2017

Store ordered by High Court to continue buying its supplies from Londis

THE operators of a Co 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 tomorrow when it is proposed that a resolution should 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 simply "a ruse" to get out of the five-year franchise agreement entered into in December 2009 - but they continue trading through another unnamed company.

Mr Justice Roderick Murphy today refused to grant an injunction against the Smyths preventing them from passing a resolution for the voluntary winding up of their company.

However, he granted an injunction which requires that they continue to buy foodstuffs, drink, household goods, hardware and other items directly from Londis or from direct delivery suppliers who operate a central billing system with the chain which has around 200 supermarkets in Ireland. This is in accordance with the franchise agreement and the order is in place pending a full hearing of the matter.

The judge 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 winding up proposal was simply "a ruse to bring to an end the franchise agreement."

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, he said.

His clients had been informed by the defendants they had "ceased trading" on June 25 last but when a Londis regional manager called to the shop earlier this month, it was still open. After buying a couple of items in the store, the Londis manager was given a receipt which contained Desmond Smyth's personal VAT number, counsel said.

While Mr Smyth had said in an affidavit that he was allowing someone else to use his VAT number as a temporary convenience, Londis were arguing that business was being carried on through someone with whom he (Smyth) had a close relationship, counsel said.

Mr Buttanshaw also said a sophisticated "point of sale" computer system in all Londis stores, which allows the head office to see what business a shop is doing, has also been shut down in the Slane outlet.

Martin Hayden SC (with Ronnie Hudson BL), 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. His clients had also asked Londis to remove its sign from over the shop but it had not done so.

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