Celtic Linen firm employing 380 people enters examinership

A company which has been a market leader in the supply of linen to hotels, hospitals and the HSE, has gone into examinership.

Celtic Linen Ltd, which employs 380 people in Drinagh, Co Wexford, has sought the protection of the High Court through examinership because it had become loss-making in recent years.

Barrister Kelley Smith, for the company, said the business had been in operation since 1926 and had been supplying bed linen, towelling and table linen to the hospitality sector, and scrub suits, patient wear and ward linen to the healthcare sectors.

At the High Court on Thursday, Mr Justice Michael Twomey appointed insolvency practitioner Mr Tom Kavanagh of Deloitte Ireland as interim examiner of the company after hearing the company had a reasonable prospect of survival as a going concern if certain steps were taken.

Ms Smith told the court an independent expert’s report had stated the company could survive if it can secure new investment, and reduce its costs.

Another step identified by the independent expert was that the examiner put together a scheme of arrangement with the company’s creditors, counsel said.

Equipment upgrade

Ms Smith said the company would need to upgrade its equipment, as its machinery was old and prone to breaking down. Its difficulties were due to its cost base being too high. It had also lost customers to new entrants into the market.

She told the court that last year the company put in place a project designed to restructure its business, but certain aspects of the plan were unsuccessful.

Counsel said the company has liabilities of €14 million and its biggest creditor, AIB bank, was supporting the application for the appointment of an examiner.

Ms Smith said that on a going concern basis the company has a deficit of liabilities over assets of €2.7 million. If the firm was to be liquidated that deficit would rise to €9.3 million.

She told Judge Twomey the company has a 19 per cent market share in the healthcare linen sector, and 15 per cent in the hospitality linen market, and annually supplies 41 million pieces of linen from its facility at Drinagh.

The judge adjourned the matter to a date in October.