Rocca losses 'impossible to understand'

Losses at Rocca Tiles and its sister firm Tilebusters were "impossible" to understand, the Revenue Commissioners claimed yesterday. Among the best known retail chains in the State, the tile shops face liquidation with a deficit of €5.57 million.

Non-executive director Mr Martin Simmons endured a barrage of criticism at two lengthy creditors' meetings yesterday. No other directors were present to hear the Revenue Commissioners and solicitors acting for creditors question in strong terms the stewardship of the company, 80 per cent of which was purchased for €4 million from the Rocca family in June 2000 by a holding company, Linfen Ltd.

Mr Simmons told the meeting the bulk of the groups' losses were incurred during 2001 and early 2002, although the company had not yet filed audited accounts for the period. Losses at Rocca Tiles climbed to €1.7 million in 2001 from €33,000 in 2000.

Revenue Commissioners official Mr Finian Loftus, said: "It is impossible to understand how you could have lost so much money in the space of 14 months." A solicitor acting for the Rocca family, Mr Michael Lavelle, repeatedly asked: "Are we going to get an explanation?"

Despite being Linfen's sole representative at the meeting, Mr Simmons said he was unable to provide precise figures for the group's revenues during 2001 and said he could not inform the meeting of the turnover of staff.

Solicitors acting for creditors said his remarks were very unsatisfactory as they had attended the meeting in the expectation that all information would be available. Responding, Mr Simmons said he was only a non-executive director.

"The directors became worried shortly after the acquisition that matters were not as expected," said Mr Simmons, who co-owns Linfen with Mr Vincente Alonso-Vicedo, Mr Charles Sherling and the former managing director of Rocca and Tilebusters, Mr John Parnell. He said the directors had done all in their power to revive the situation and had invested €2.325 million in the company "at various stages". This included €500,000 invested last January, weeks before the shops closed.

Mr Simmons said the principal difficulty was that costs had increased. "The turnover didn't build up enough to meet the costs," he said. "I can't explain to you any more." The Rocca and Tilesbusters outlets went into receivership early in March.

According to statements of account distributed to creditors, Rocca Tiles has a deficit of €3.85 million and Tilebusters has a deficit of €1.71 million.

While some €497,960 is owed to the Revenue Commissioners by the two companies, Linfen itself is owed €2.32 million by the two companies. Rocca Tiles is owed €350,000 by Tilebusters. In addition, a company part-owned by Mr Alonso-Vicede, Zania Corporation, is owed €390,780.68 by Rocca and Tilesbusters. Mr Simmons said he was unable to state when Zania had last been paid by either company. Mr Simmons only learned through newspaper reports that Mr Alonso-Vicede had a fraud conviction in the early 1980s.

Linfen was accused at the meeting of omitting the names of certain creditors from the statements of account and of mis-stating certain amounts due to creditors.

In addition, the company was accused to failing to comply with the Companies Act in calling the meeting. While advertisements had appeared in the Irish Examiner on May 4th, an advertisement in the Star appeared only on May 8th despite a requirement to give 10 days notice of the the meeting in a second national newspaper. This was due to a production error, Mr Simmons said.

Attempts were made to elect an alternative liquidator - Mr Tom Kavanagh - but they were voted down. Mr Kavanagh attended the meeting with a solicitor, Mr Kirby Tarrant, who acted for a number of creditors to both chains. He was among the most vocal critics of the company, claiming that it had made a "dog's dinner" of the statement of affairs.

Mr Pearse Farrell, of Farrell Grant Sparks, was installed as liquidator at the suggestion on Linfen.

Opening the meeting, Mr Simmons said he was unable to comment on certain matters due to legal actions by the Rocca family against Linfen. Proceedings by Linfen against the Rocca family were "pending".

Citing the losses, he said: "We very much regret that we have ended up in this situation." The company had gone into receivership after National Irish Bank indicated it would no longer extend a debenture for £310,000 (€393,700).

This debenture was purchased "pound-for-pound" by Mr Simmons' family firm, the Simmons Trust Company, and Mr Sherling's firm Zeist Enterprises.

There had been stock write-offs, unaccrued for contingent liabilities, increased rents and back-dated rent reviews and increased staff and administration costs. "The directors were not satisfied that some of the assets on the books were being carried at a value which they could stand over," Mr Simmons said.