AN EXAMINER was appointed by the High Court yesterday to the Tallaght company, Cornel Electronics Ltd. The company employs 84 people, many of whom are highly qualified in computer science.
The court was told that since the petition for an examiner was advertised last week, seven parties had expressed an interest in investing in the company.
Mr Justice Shanley appointed Mr Paul Wyse of Oliver Freaney & Co, as examiner to Cornel Electronics Ltd, Broomhill Drive, Tallaght, Dublin.
Mr Charles Meehan, counsel for the petitioners, said the petitioners were the directors of the company. The company was losing money at the rate of about £50,000 per month.
Reading the petition, Mr Meehan said the company operated an international data pumps business, a domestic Datacomms business/local area network products and customer service, maintenance, and a modem business, both domestic and international.
The company employed 84 people, a significant number of whom were highly qualified in computer science. The liquidation of the company or appointment of a receiver would inevitably lead to the loss of these jobs and a consequent loss to the local economy.
The international data pumps business accounted for over 60 per cent of total sales. The company was quite stable for the last number of years and making a profit. The annual turnover had been around £6 million. It was now insolvent and unable to pay its debts.
There were three reasons for the losses. The first was the failure of a very significant project, the OEM (Original Equipment Manufacture) development. Major expenditure was incurred on this project and it turned out to be disastrous in financial terms.
Other areas were the decline of the domestic business, particularly in Datacomms and an over heads structure which was excessive and inappropriate for the current scale of business.
A major proportion of the trading loss estimated for 1995 was over £1 million and attributed to the failure of the OEM project.
The three matters needed to be addressed as a matter of urgency and would require a restructuring of the company's management, and business activities.
In the last number of months and in the light of the losses the petitioners requested a review by management of the adequacy of provisions in the area of stocks and debtors/prepaids.
The outcome was that £883,000 had to be included in the profit and loss account for 1995, by way of exceptional provision.
The petitioners believed the company could survive as a going concern provided certain conditions were met, the most important being the need for new investment. The company traded profitably in the past, had a viable business, a good reputation in the market, major overseas customers and a dedicated and skilled workforce.
Ernst & Young, auditors, believed the company did have a viable business provided new investment was made. This would be in the best interests of the employees and creditors.
Mr Meehan said seven companies had expressed an interest in investing in the company since the petition was advertised last week. He handed in a letter containing the names to the judge.
Mr Meehan said the secured creditors were not opposing the petition.
Mr Michael Cush, counsel, said he was appearing for the second largest unsecured creditor, Avnet Lyco Ltd, in the sum of £320,000. He was supporting the appointment of an examiner.
