Petition lodged to wind up Dunnes
A company has brought a petition to wind up retail giant Dunnes Stores over its failure to pay some €21.6 million due under a court judgment issued over an unpaid debt for building works.
Dunnes employs about 18,000 people in stores nationwide and the case is listed before the Commercial Court on Monday.
Holtglen Ltd, which built a shopping centre in Kilkenny in which Dunnes agreed to be the anchor tenant, has brought the petition following Dunnes' failure to pay after being ordered to do so by Mr Justice Peter Kelly in a summary judgment order issued last March.
The Ferrybank shopping centre was completed in 2009 but Holtglen later became insolvent and its Bank of Ireland loans were transferred to National Assets Management Ltd (NALM), a company of the National Assets Management Agency (Nama).
It is understood Nama wrote to Dunnes on October 30th last warning, unless Dunnes paid some €21.6 million (the €20.4 million judgment sum plus interest) within seven days, Holtglen would proceed to publish a petition to wind up Dunnes on grounds it is unable to pay its debts and/or it is just and equitable that it be wound up.
Holtglen claims there is no justification for Dunnes not paying the sum due.
Last March, Mr Justice Kelly granted summary judgment for some €20.4 million to Holtglen against Dunnes after he dismissed Dunnes' application to set aside an arbitrator's award for €20.2 million to Holtglen arising from an agreement to build the centre.
Holtglen claims, despite the summary judgment order, Dunnes has still not paid and now owes it some €21.6 million. Last September, it served a notice under Section 214 of the Companies Act on Dunnes.
Section 214 provides, where judgment has been obtained against a limited company, a notice can be issued threatening to wind up that company. If the debt is not paid within 21 days, a petition can be presented to the court seeking to have the company wound up.
On November 9th last, a petition was issued and the matter is due before the Commercial Court on Monday.
Previously, the Commercial Court heard Dunnes had instituted arbitration proceedings claiming breaches of a development agreement by Holtglen which in turn counterclaimed for payment. Holtglen claimed it was then entitled to stage payments due under the development agreement, plus other sums for which it had counterclaimed.
It said it has very large borrowings in connection with the Ferrybank development and it was "of the utmost importance" it was paid by Dunnes as soon as possible. Holtglen later became insolvent.
In October 2011, the arbitrator, while upholding some of Dunnes complaints of breaches of the development agreement, found Holtglen had remedied those matters and Dunnes was not entitled to terminate the development agreement.
Dunnes applied to the Commercial Court to set aside the arbitrator's findings. It argued, as Holtglen was insolvent, it was precluded from claiming the money due. During the hearing, the court was told Holtglen's loans to Bank of Ireland had been transferred to a NAMA company, NALM.
In his judgment, Mr Justice Kelly said the transfer meant NAMA had stepped into the shoes of Holtglen and its insolvency was now an irrelevance. It also meant any concerns Dunnes might have in relation to future obligations not being honoured had evaporated, he said.
The judge found the arbitrator had not erred in law in the approach taken by him to construction of the agreement between Dunnes and Holtglen.
Despite the fact the shopping centre was completed in 2009, Dunnes had only paid "a fraction" of the money due for the work, he said.
The logical outcome of Dunnes argument was a "wholly unattractive" result from the point of view of business commonsense or commercial reality, he added.
The judge granted Holtglen summary judgment for the €20.2m after rejecting Dunnes' application for an adjournment to allow it consider his ruling.
He also refused to grant a full stay on his decision pending the outcome of any appeal to the Supreme Court which, the judge said, could mean another three years of Holtglen being deprived of its entitlement. It is understood Dunnes has not appealed that ruling.