The liquidator to leading fashion goods manufacturer Chesneau has said he hopes to sell the company as a going concern. BES investors in the Kilkenny-based factory have lost more than £500,000 and the company has debts approaching £400,000.

Mr Tom Fitzpatrick, of accountants Fitzpatrick Morris Barrett, said he had to start examining the company's affairs, but creditors might be better served if the Chesneau was marketed as a business unit. However, sharp differences emerged among the shareholders, with one, Mr Edmond Chesneau, the original founder of the company, blaming the BES fund investors for its current state. He said he intended to start his own company again.

A creditors' meeting heard yesterday that the company - whose Chesneau brand is among the leading brands in women's handbags in Ireland - had realisable assets of £250,0000, preferential creditors of £60,000 - comprising the Revenue Commissioners and wages due - and unsecured creditors of almost £340,000. The unsecured creditors will probably get about 55p in the pound.

Allied Irish Bank (AIB), which has an unsecured loan of £82,400, is the largest single creditor. However, An Bord Trachtala is the second-biggest and is owed £78,5000. IDA Ireland is owed £38,000. A supplier, Borge Garveri, is owed £62,000 and the remainder are owed relatively small amounts.

The company's chairman, Mr Michael Conlon, who is also chairman of Bord Gais, told disgruntled creditors that the company "had not reached the level of sustainable profits" and had simply run out of money, despite substantial cash injections over the past three years. The company had been talking to prospective investors but had run out of time, he said.

The company's name is Baltino, but it traded as Chesneau. Business and Trading House (BTH), a well-known BES fund-raiser, was a major shareholder in the company (52 per cent), and Mr John McGilligan, who runs BTH, was a Chesneau director. BTH had invested around £450,000 and a dozen other BES investors had put in sums ranging from £5,000£6,000 each.

An angry Mr Chesneau, who holds 22 per cent of Chesneau, said the company had died of a cash injection. He said that before the BES investment the company had had healthy gross margins and strong sales growth.

However, he said "too many things had been mismanaged" in the company by the new investors and sales and gross margins had begun to drop. Mr Chesneau said he had managed to break into the international markets, but the new team had lost all these contracts.

One creditor said the company had been haemorrhaging money for two years and had effectively been rudderless. A BES investor, he said, he had been absolutely horrified that money had been injected twice and the company had traded unsuccessfully. Mr Conlan rejected this, saying the directors had taken actions which had improved the situation considerably. He said the company had showed a profit for the month of December 1997.

The meeting was told that in 1996 the company had sales of £600,000 and sales of £800,000 last year and would have broken even on sales approaching £1 million.

Speaking after the meeting, Mr Chesneau said he had been the product designer and when new investors came in they had employed another design consultant, although he was being paid good money to do the job. He said he hoped to restart the company which had employed 30 people. In 1996 he had concluded an agreement with the investors that would allow him to buy the Chesneau name and the intellectual property rights for a nominal sum if the company went into liquidation. However, this depends on the agreement of Forbairt, the state agency which also invested £269,000 in the company.

A Forbairt spokesman said last night that the liquidator was now in charge of all assets. He said Forbairt's preference would be for the company to be sold as a going concern.

Speaking after the creditors' meeting, Mr John McGilligan admitted that there had been difference between Mr Chesneau and a Japanese investor's representative and the other three board members. Mr McGilligan said the company needs a new investor, who has access to outlets to distribute the Chesneau products, rather than just a cash investor.

He said he would be reasonably confident that Chesneau could find a buyer so that it could trade again.