A provisional liquidator has been appointed to a Co Kilkenny farming company that is said to produce about 12 per cent of the €66 million Irish carrot market.
Judge Oisín Quinn said the provisional liquidator will ensure Hughes Agriculture & Farming Limited’s €2.8 million worth of carrots, parsnips and daffodils can be harvested.
The company, represented by barrister Jonathan Fitzgerald, asked the judge to appoint Colin Gaynor, of Resolute Advisory, as provisional liquidator.
Quinn made the appointment after noting the company was insolvent and owed a substantial debt to Revenue and other creditors.
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Julian Hughes, founder and sole director of the company, told the court there was a “confluence of urgent challenges” facing the business, including an “acute cash-flow crisis”, with just €4,426 in its trading bank account. He believed it was neither possible nor appropriate to attempt to continue to trade.
In an affidavit, he said a variety of factors over the last three years, including wage and input-cost inflation, have contributed to the company’s inability to achieve a stable financial position. Further, he said, forecast annual sales have reduced by €600,000 this year due to weak market demand and poor growing conditions caused by “relentless rain”.
The company, which was incorporated in 2012 with an address in Haggard, Kells, Co Kilkenny, was forecast to record a net loss of €941,000 this year, Hughes said.
The company owes about €1.4 million to trade creditors and €689,000 to Revenue in PAYE, PRSI and warehoused debt, he said. He and the company’s other 50 per cent shareholder, Donum Loza Limited, based in Clontarf, north Dublin, advanced loans totalling €1.5 million over the last three years and have “exhausted” options to access further debt finance.
He said the company needs a provisional liquidator appointed to realise its “perishable assets” for its creditors.
Hughes explained that the carrot season ends around May 1st, with only a short period left to harvest before they “switch from being an asset to a liability”.
He said the sale of carrots increases six to eight fold over Easter due to the traditional meals eaten, with demand “immediately and very significantly” dissipating after Easter Sunday.
If the company could harvest, process and package the 65 acres of carrots itself, the crop would yield about €1.76 million to the company, of which about €1 million would be net profit. Selling the carrots in the ground to another producer for harvesting would bring in €500,000 or so, he said, adding that he believes this option is more “straightforward”.
The company has 10 acres of parsnips worth €150,000 packaged or €100,000 in the ground, he said. It also has between €900,000 and €1 million worth of daffodil bulbs spread across 75 acres. These must be sold by the end of March, he said, adding they could contaminate the rental lands if left in the ground too long.
Hughes said all of the crops are planted on rented lands owned by landowners with whom the company has built up “goodwill” over the years. He believes these landowners will not tolerate rotting crops and abandoned growing equipment. The lands are in a “poor state” following the prolonged bad weather and “cannot just be abandoned”, he added.
“The word is out that the company is in difficulty”, he said, adding he feared landowners know the best chance of seeing their money is by exercising control over the crops. Engagement with the farmers by the provisional liquidator “would go a long way to mitigate a large potential loss of monies” that should be available to creditors, he said.
The judge scheduled the winding-up petition for two weeks’ time.
