Dunnes winding-up petition in December:When is a company both “robustly solvent” and, under the terms of Section 214 of the Companies Act, deemed unable to pay its debts?
When that company is Dunnes Stores and it refuses to pay some €21.6 million to its creditor, insolvent developer Holtglen Ltd, over a debt for building works at a shopping centre in Kilkenny.
It is fair to say that Mr Justice Peter Kelly wasn’t readily embracing the logic of Dunnes’s argument, which had been earlier summed up by Maurice Collins SC, for Holtglen Ltd, as a “can pay, won’t pay” approach.
“I must say I find your client’s position difficult to understand,” Mr Justice Kelly told Brian O’Moore SC, for Dunnes , although he stressed he was not determining the issues of the case.
“Dunnes Stores is no different than any other litigant,” Mr Justice Kelly added, describing O’Moore’s claim that the retailer had been “stampeded” into becoming the development’s anchor tenant as “extraordinary”.
The retailer had not appealed a summary judgment issued by his court in March, after he dismissed Dunnes’s application to set aside an arbitrator’s award, and therefore the order to pay up was binding, the judge noted.
Dunnes preferred to concentrate on its concerns about the non-viability of the shopping centre, which is located at Ferrybank, Co Kilkenny.
Given that Dunnes is the anchor tenant in several Nama developments, the interests of the retailer and those of the State assets agency, which has taken over Holtglen’s loans, are very much aligned, the court heard.
Mr Justice Kelly did not seem especially keen to hear about the relative merits or otherwise of the development at this particular hearing, nor did he express any sympathy with Dunnes’s argument.
Instead, he observed that Nama’s position was “not unreasonable” in the circumstances.
“Nama, who are now effectively in the shoes of Holtglen, have said they are happy to talk to Dunnes Stores – but first the debt must be paid.”
The contested winding-up petition will now be heard on December 14th. The petition must be advertised by Dunnes seven days ahead of the proceedings so that any other creditors who want to, can come along and get involved in the motion to wind-up this “robustly solvent” company.
The judge’s word – “extraordinary” – seems apposite.
Spotlight still shines on agriculture
The failure to strike a deal on the EU budget last week has put the issue of the Common Agricultural Policy back into the spotlight.
The possibility that the CAP budget may be reduced now threatens to hang over Ireland’s presidency of the EU, even though the prospect of cuts seems to have receded since last week’s meeting.
Nonetheless, the issue highlights the importance the agricultural sector still holds in Ireland. Although the agri-food sector represents only about 7-8 per cent of GDP, its impact on the indigenous economy in terms of jobs and its knock-on effect on the local economy is enormous.
Unlike many multinationals, for example, Ireland’s agri-food industry sources the vast majority of its inputs from the domestic economy, generating significant economic impact.
The role of CAP in supporting Ireland’s largest indigenous industry is also worth keeping in mind as members of Glanbia co-op gather this week in Kilkenny to vote on the second part of the proposal on the hiving off of the company’s dairy division.