Unsecured creditors of Orla Kiely licensing arm to receive much higher dividend
Administrators said dividend to rise from 2p in pound to up to 30p
The administrator noted that the failure of the business appeared to be the amounts used to fund the business of the US entity where the opening of a store in New York City created a drain on cashflow.
Unsecured creditors owed £1.9 million (€2.1 million) from a licensing arm attached to the collapsed Orla Kiely fashion retail empire are to receive a much higher dividend than originally estimated.
Administrators to Kiely Killyon Stem LLP confirmed the unsecured creditors can now expect a dividend of between 20p to 30p in the pound.
This is a multiple of their previous estimate of 2p in the pound and it follows the administrators’ forensic teams conducting an investigation into monies owed to the LLP by licensees.
The administrators said this has resulted in a settlement of £120,000 from one licensee.
The main activity of Killyon Stem LLP’s was holding licence agreements with manufacturers on behalf of the Orla Kiely brand.
According to the new report from Mr Newell on Killyon Stem LLP, the administrators allowed the licences to continue to trade in order to maximise the return in the administration estate.
They said that during the review period, licence income totalled £106,890.
Mr Newell also reported that the £120,000 settlement from one licensee arose from an investigation by the administrators into several agreements which stipulated that a minimum annual amount must be paid each year.
Mr Newell said the examination was not a straightforward task and that the £120,000 settlement is his firm’s solicitor’s account awaiting clearance.
“Investigations and discussions with other licensees are ongoing which may result in further realisations,” he added.
The partnership owed secured creditor, Metro Bank plc £2.15 million on appointment and Mr Newell reported that £218,500 has been distributed to date to the bank. He said it is not expected that Metro Bank will be paid in full.
The joint administrators’ focus remains on fully exploring the flow of funds through the Orla Kiely group companies, Mr Newell said.
He noted that the failure of the business appeared to be the amounts used to fund the business of the US entity where the opening of a store in New York City created a drain on cash flow,causing the requirement for additional borrowing, which eventually lead to the collapse of the group.
“Investigations into this matter and the actions of the directors in funding the US project to the detriment of the remainder of the group is currently ongoing,” he said.
Mr Newell said the revised fee estimate now stands at £170,000 to cover the entire period of the administration. “This case has been and continues to complex … additional time has had to be spent than originally envisaged however this has resulted in a greater outcome for creditors,” he said.