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Superquinn sale to hit small firms

The sudden sale of the Superquinn chain saved 2,800 employee jobs but scores of small Irish suppliers risk closure or lay-offs because they are owed €28m.

Retail giant Musgrave has agreed to buy the struggling grocery business which was drowning under more than €400m debt to the banks for property deals.

Despite the sale securing employees' futures, a number of the supermarket's 660 suppliers could go to the wall as they battle to recoup losses of anything from 10,000 to a million euro.

The crisis sparked accusations of double standards in the corporate world between banks and small businesses.

Mark Fielding, Irish Small and Medium Enterprise (Isme) association chief executive, said eight firms owed from 10,000 to 100,000 euro have contacted his agency.

"It's awful to hear grown men cry but I've heard that today," he said.

"What we are saying is that these guys knew, that they had a good idea, that the business was in trouble," Mr Fielding said.

"And this is the really galling thing - the banks who called in the receiver, they will get their money back. The people who were not paid, who's going to come after them again, only the banks. It's the same banks who are bringing in the receivers who could force the closure of small businesses."

Under Irish receivership laws KPMG are only obliged to clear outstanding mortgage debt in the company on behalf of the banks.

Patricia Callan, director of the Small Firms Association, said the Superquinn sale was a well-planned process to write-off debt.

"It's not acceptable. The smaller producers have a disproportionate presence in Superquinn and will be more badly affected," she said.

Fifty business contacted the SFA and 50 also contacted the Food and Drink Industry Ireland (FDII), a division of the lobby group Ibec.

Most of the suppliers and producers have been waiting for payment for up to three months and some have received cheques in the last week.

Mr Fielding said a complaint is to be lodged with company law watchdog the Director of Corporate Enforcement over the way Superquinn's owners have handled business in the last few months.

Superquinn is in receivership controlled by accountancy firm KPMG. It has more than €400m debt which includes €275m owed on property deals and up to €150m on other bills.

There is also about €50m outstanding for suppliers. KPMG said €22m of this is covered by a special insurance policy held by main suppliers of meat, fruit and vegetables.

The vast majority of smaller, local producers - which Superquinn maintained it spent four out of every five euro of its stock on - have been unable to secure cover like that.

Their only other hope to recoup losses is if they have "retained title" on their goods and can march into shops and take the product off the shelves.

It is believed it could take up to 10 weeks for the deal to be signed off by the Competition Authority.

Superquinn was founded by Feargal Quinn in 1960 and remained in the family's hands until 2005 when it became a subsidiary of Select Retail Holdings Limited.

It has 24 stores across Ireland, including 16 in Dublin.

If approved, the Musgrave takeover will make it the third largest supermarket group in the Dublin area, where the bulk of the Superquinn stores are based, behind Tesco and Dunnes.

The family-owned Musgrave Group operates a range of retail outlets including SuperValu, Centra and Daybreak in Ireland, Budgens and Londis in Britain and Dialprix in Spain.

The company is worth €2.9bn to the economy and supports 14,000 jobs across 600 supplier companies.

Gerry Light, Mandate's assistant general secretary, said it was crucial that the staff's terms and conditions were protected.

"We're making it perfectly clear now that the Mandate trade union will do everything in our power to protect the terms and conditions of employment of the 2,800 staff at Superquinn," Mr Light said.

"We have already negotiated significant changes to assist the company's trading position and it is vital to the future success of the business that this contribution is respected."

Meanwhile, the Irish Farmers' Association said it was concerned three major retailers will control 70% of the grocery market if the sale goes through.

IFA president John Bryan called for a code of practice in the sector to ensure producers and suppliers are treated fairly.

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