Store told to carry on buying Londis supplies

THE OPERATORS of a Co Meath store which traded under the Londis name have been ordered by the High Court to continue buying their supplies from the supermarket chain pending a hearing over whether they breached a franchise agreement.

However, the court refused to grant an injunction restraining Partridge Ltd, and its directors Desmond and David Smyth, from holding a meeting today to put a resolution to creditors to wind up the company which operated the store on the Derry Road, Slane.

ADM Londis had sought injunctions against the three defendants, alleging the proposed winding up was “a ruse” to get out of the five-year franchise agreement entered into in December 2009 while they continue trading through another unnamed company.

Mr Justice Roderick Murphy refused to grant an injunction against the Smyths preventing them passing a resolution for the voluntary winding up of the firm.

However he agreed to grant an injunction requiring them to continue to buy foodstuffs, drink, household goods, hardware and other items directly from Londis or from direct delivery suppliers who operate a central billing system with the chain, which has about 200 supermarkets in Ireland.

The order is in accordance with the franchise agreement and applies pending a full hearing of the case.

The judge said he was satisfied the defendants had not revealed the full extent of their financial affairs to the court. There was only a reference in an affidavit that the company was incapable of paying its debts but no statement of affairs had been provided, he said.

Earlier, Angus Buttanshaw, for Londis, said the winding up proposal was “a ruse” to end the franchise agreement.

The accounts for the business showed the store was “perfectly profitable” but a decision had been made to no longer honour the agreement and put the company into liquidation, he said.

His clients had been informed by the defendants they had “ceased trading” on June 25th, but when a Londis regional manager called to the shop earlier this month, it was still open. After buying a couple of items in the store, the Londis manager was given a receipt which contained Desmond Smyth’s personal VAT number, Mr Buttanshaw said.

While Mr Smyth had said in an affidavit he was allowing someone else to use his VAT number as a temporary convenience, Londis contended that the business was being carried on through someone with whom Mr Smyth had a close relationship.

Mr Buttanshaw also said a sophisticated “point of sale” computer system in all Londis stores, which allows the head office to see what business a shop is doing, had been shut down in the Slane outlet.

Martin Hayden SC, for the defendants, urged the judge not to grant an injunction on grounds that if Londis succeeded at the full hearing, damages would be an adequate remedy.

The accounts referred to in the case were only draft accounts and did not include a number of important liabilities, counsel said.

His clients had also asked Londis to remove its sign from over the shop but it had not done so, he added.