A family who established a chocolate food products firm in Co Dublin almost 30 years ago, currently employing about 100 people, want the High Court to appoint an examiner to the company.
Mr Justice Michael Quinn was told Ina’s Kitchen Desserts Ltd is balance sheet insolvent with debts of almost €9 million, and is, or is shortly very likely to be, cash flow insolvent but is believed to have a reasonable prospect of survival if certain steps are taken.
The petition for examinership by Barry Broderick, a 10 per cent shareholder, is supported by his brother Bernard and their parents Ina and Michael Bernard Broderick, but is strongly opposed by the company and its majority shareholder, Starkane Ltd.
The company is based in Whitestown, Tallaght, and its registered business names are Ina’s Kitchen Desserts, Broderick’s, Ina’s Handmade Foods and Broderick’s Handmade. It was established in Ina Broderick’s kitchen and her family between them own 25 per cent of the shareholding.
Enterprise Ireland, which has a long-standing relationship with the company since 1998, had introduced the directors to a BDO development capital fund, which continues to provide funding. Starkane was incorporated by the fund as a special purchase vehicle to acquire shares and put money into the company and now owns 75 per cent of the shares.
The hearing of the examinership application opened on Monday afternoon before Mr Justice Michael Quinn.
John O’Donnell SC, for Barry Broderick, said the petition concerns a very significant business employing about 100 people but with debts of close to €9 million. It has been forced to postpone payments to Ulster Bank, a secured creditor owed €2.6 million and neutral on the petition, and to Revenue, owed some €407,000.
In 2018, it had to get an extension of its facilities from Ulster Bank to be able to pay wages to its employees at Christmas, counsel said.
This year, the company found itself obliged this year to avail of the State’s Temporary Wages Subsidy Scheme (TWSS), which requires that a company cannot pay wages as they fell due. Minutes of the board of the company had stated, without availing of the TWSS, the company would be unable to pay wages.
That amounted to an admission by the company of being unable to pay its debts as they fell due, he said.
While the company has an attractive product and blue chip customers, it is in “a perilous financial position”.
Both sides took the view it has a reasonable prospect of survival provided certaCounin conditions are met, but Starkane did not accept the company is insolvent, he said.
Starkane was taking the view the petition was presented to undermine its position and was an attempt by the Brodericks “to take back control”.
Discord on the board
The Brodericks would not themselves gain by examinership, counsel said. Their concerns are to save the business and the jobs and their mother’s legacy and the law provides a minority shareholder can present a petition for examinership.
The “prudent” course is to face up to the company’s insolvency through examinership, he said. The fact there is discord on the board and between directors should not lead the court to refuse protection. The petition was presented for the benefit of the company, its employees and is creditors, and not for benefit of the Brodericks.
Other concerns of the family include that Starkane has secured its debt in circumstances where the company had been unable to pay wages unless it had the TWSS, he said. The company needs capital expenditure funds quickly to address capacity issues but, while Strakane keeps saying it will make money available, it will not say in what form or on what terms, counsel said.
The hearing continues on Tuesday.