Petition to wind Dunnes Stores up withdrawn after €21.6m paid

A petition to wind up retail giant Dunnes Stores has been withdrawn at the Commercial Court after the company paid some €21.6 million owed by it for a shopping centre development in Co Kilkenny.

The National Asset Management Agency had authorised Holtglen Ltd, which is insolvent with loans gone into Nama, to bring the petition after Dunnes failed to pay despite an arbitration award made against it, followed by a judgment order against it at the Commercial Court last March.

Holtglen claimed its insolvency arose from the non-payment but Dunnes said it was unwilling to pay on several grounds including its concerns about the viability of the centre at Ferrybank, just over the county border north of Waterford city.

When the matter came before Mr Justice Peter Kelly yesterday, Maurice Collins SC, for Holtglen, said he wanted to withdraw the petition as Dunnes had paid the money owed on Thursday evening.

‘No excuse’

The money should have been paid sooner, there were “no excuse” why it was not, and while his side regretted having to bring the petition, it had to to achieve compliance, he said.

Brian O’Moore SC, for Dunnes, said the court was aware of the reasons why the money was not paid. Those reasons may be good or bad but they were “genuinely held”, he said. Mr O’Moore added he had express instructions to relay that Dunnes had intended no discourtesy to the court.

Mr Justice Kelly said he was glad to hear counsel say that because, on one view, the failure to pay could be regarded as a challenge to the court’s authority. The matter was “not so simple”, as the petition was for the benefit of all creditors of Dunnes, he added, and directed any other creditors be called.

There was no appearance by any other creditor and Mr Collins said none had indicated an intention to appear.

The judge said there could have been no answer to the petition in the circumstances of this case but, as the debt had now been discharged, Holtglen was seeking to withdraw the petition and he would allow it do so.

He was told the issue of legal costs had been agreed between the parties.

Dunnes, which employs 18,000 people, had previously said it was “robustly solvent” but was unwilling to pay the money to Holtglen on several grounds including its concerns about the viability of the centre.

‘Unmitigated disaster’

In letters to Nama chief executive Brendan McDonagh, Dunnes chief Margaret Heffernan described the Ferrybank centre as “an unmitigated disaster”. Pressing the court to appoint a liquidator to Dunnes was “an extraordinary step” for anybody, particularly a public agency, to take, she added.

Nama wrote to Dunnes on October 30th last warning that unless Dunnes paid €21.6 million to Holtglen within seven days Holtglen would petition to wind up Dunnes on grounds it was unable to pay its debts and/or it was just and equitable that it be wound up.

It was contended Dunnes had deliberately decided not to pay despite asserting it had capacity to pay and that planning issues raised by Mrs Heffernan about the development were “just thought up”.

Mr Justice Kelly had remarked that as Dunnes had not appealed his Commercial Court judgment last March enforcing an arbitrator’s award to Holtglen against Dunnes it was difficult to see how Dunnes had a defence to payment.

Last March, Mr Justice Kelly granted summary judgment for €20.4 million to Holtglen against Dunnes after upholding an arbitrator’s award arising from a 2007 agreement to build the centre for €37 million.

Dunnes said it had paid some €18 million to date on foot of the 2007 agreement for construction of the development for some €37 million. In correspondence it indicated it would pay another €7.5 million and transfer its rights in the centre to Nama if that was accepted as the end of its obligations.

Nama had insisted Dunnes had to pay the €21.6 million to Holtglen before Nama would engage in any talks about the operation of the development.