Owner of company behind Clerys cafes in legal action

Liquidator to Clerys operating company to hold meeting of creditors

Lorraine Sweeney, whose LS Catering company owned the cafes at Clerys, says she is preparing legal action against several parties involved in the recent sale and liquidation of the companies behind the iconic department store.

KPMG, the liquidator to Clerys' operating company, OCS Operations, is due to hold a meeting of creditors today to appoint a committee of inspection to oversee the liquidation.

Ms Sweeney, a former chair of the Small Firms Association, is refusing to take part in this process, which she believes “endorses” the controversial liquidation, which happened on the same day as the store was sold in June.

More than 400 staff members lost their jobs on the day of the sale, with no notice given.

Ms Sweeney believes the property assets of Clerys should not have been separated from the insolvent trading arm prior to the liquidation, as it left fewer assets to be distributed among creditors, including concession holders who are owed up to €3 million.

‘Predatory’

She has repeatedly criticised the separation and subsequent liquidation, which she has previously publicly alleged was “predatory” and an act of “asset stripping”.

LS Catering says it has written to a number of parties to put them on notice that it is filing legal action in an attempt to reverse the effect of the separation of OCS’s property and trading assets for the purposes of the liquidation. Ms Sweeney said she wants the assets of OCS Holdings, OCS Properties and the trading arm “pooled” for liquidation.

She says her company has written threatening the legal action to the KPMG liquidators, property developer Deirdre Foley's Natrium consortium that bought the Clerys building, the US private equity company Gordon Brothers that sold it, and Jim Brydie, the UK-based insolvency specialist who bought OCS Operations for €1 on the day the entire business was sold and put in liquidation.

KPMG, Natrium and Gordon Brothers did not comment on LS Catering’s proposed legal action, while Mr Brydie could not be reached for comment.

Ms Sweeney said yesterday she believes the appointment of a creditors’ committee of inspection is “just a face-saving exercise” and that the “whole process” of the Clerys sale and liquidation is flawed, and leaves fewer assets for creditors.

Legal action

“We wrote to all of the parties two weeks ago and advised them we are joining them all to the legal action,” she said. “We have appointed legal advisers and we have sought to instruct counsel and proceedings will be issued within weeks.”

LS Catering has appointed Barry Healy solicitors to represent it in its proposed action.

“This creditors meeting is yet another step in the planned wipeout of Clerys. This pre-planned process was facilitated by Gordon Brothers, Natrium and their advisers. It is a matter of principle that they should be challenged. This difficult and expensive journey will be worth it if it prevents such a scandal in future,” said Ms Sweeney.

Mark Paul

Mark Paul

Mark Paul is Business Affairs Correspondent of The Irish Times. He also writes the Caveat column

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