Sufficient protection in Clerys type liquidation cases, says minister

Company law adequate to deal with issues arising from liquidation

Ged Nash said the State may well turn out to be the biggest loser in the controversy as it will have to pay out large sums of money to former employees of Clerys

Ged Nash said the State may well turn out to be the biggest loser in the controversy as it will have to pay out large sums of money to former employees of Clerys

 

Charlie Taylor

Minister for Business and Employment Ged Nash has said he believes there is sufficient legal protection in place to deal with issues arising from cases such as the liquidation of the department store Clerys.

Mr Nash said workers and creditors at Clerys would not get paid over and above statutory payments by the liquidators but added that current law does provide for a situation where assets are kept in one arm of a company, while losses accumulate in another part, which is then liquidated.

The Minister said that in economic terms, the State may well turn out to be the biggest loser in the controversy as it will have to pay out large sums of money to former employees of the company.

In a report sent to the Government on Tuesday on the closure of the department store, Mr Nash again urged the owners of Natrium, the joint venture which acquired the Clerys building last month, to meet with him to discuss its future plans.

In a letter addressed to Taoiseach Enda Kenny sent with the preliminary report, Mr Nash said he did not believe there were deficiencies in the legislative framework to protect employees and creditors and to recover corporate assets. He said he expected that the company’s assets should be available to the liquidators but said that if this turns out not to be the case that action should be taken to address the issue.

The new report outlines the events and circumstances surrounding the sale and subsequent liquidation of Clerys.

“My provisional opinion, at this preliminary stage, is that we have as yet no reason to believe that the measures I have listed (in the report) are inadequate to ensure the intended policy outcome: to ensure, in other words, that all the assets that should properly be available to the liquidators of a company can be recovered by them,” Mr Nash said in the study’s conclusion.

“What happened in Clerys was very shocking. I am unaware of any explanation from those involved as to why it was believed necessary to treat them in the manner I havedescribed. But I want to be clear about this. There is no evidence that what happened is due to any discernible failure of our employment laws or a failure on the part of any State body. Indeed, in economic terms the State may well turn out to be the biggest loser in this transaction. In acting as - in effect - the statutory undertaker for the liabilities of the trading company to its employees, the Department of Social Protection will pay out very significant sums of money over the coming weeks,” he added.

Mr Nash has urged Natrium, the owners of the Clerys building, to meet with him to discuss the group’s plans, and to engage with the former staff and union representatives. While the joint venture has yet to do so, it did issue a statement late last month in which it said it was “conscious that the necessary closure of the department store has had a very serious impact on the former employees.”

In its first public comments, Natrium said it intended to invest in the rejuvenation of the property in a move that would ultimately lead to the creation of a minimum of 1,700 jobs in Dublin city centre.

Clerys was sold last month by Boston-based Gordon Brothers to Natrium, which comprises Irish investment group D2 Private, and Cheyne Capital Management in the UK, with financing from Quadrant Real Estate Advisers.

OCS Operations Ltd, which ran the department store, was then placed into liquidation in dramatic fashion, resulting in the immediate closure of the department store and the loss of about 400 jobs. The company behind Clerys directly employed 130 people while another 330 were employed by 50 concession holders, who sold their wares in the department store and paid OCS Operations a percentage of their turnover.

The High Court confirmed the appointment of joint liquidators to OCS Operations on Monday. Former concession holders at Clerys look set to share about €500,000 under a plan drafted by the provisional liquidators of the entity. This represents a significant haircut on the €2 million to €3 million they are thought to be owed in merchandising sales dating back to the start of May.