A FREEZE imposed on Superquinn’s bank accounts prevented the retailer from honouring cheques issued to creditors before it was placed in receivership a week ago owing €55 million to suppliers and €275 million to banks.

The banks appointed receivers to Superquinn on Monday. Franchise operator Musgrave announced it had agreed to buy the 24-store chain on Tuesday.

The company and the deal are at the centre of two High Court actions, one of which could result in an examiner being appointed to the business.

A number of creditors, along with organisations such as the Irish Farmers’ Association, Irish Small and Medium-sized Enterprises (ISME) and business lobby Ibec’s food and drink division, confirmed that a number of Superquinn cheques issued to suppliers two weeks ago have bounced.

The cheques were issued 14 days ago, and creditors who presented them before last Monday received their payments. Any cheques presented from that point were not honoured as the banks froze Superquinn’s accounts the day the receivers moved in.

One of the receivers, Kieran Wallace of KPMG, said that creditors who presented payments on Friday, July 15th, to banks other than those against which the Superquinn cheques were drawn, could also have been hit.

He said that all companies placed in receivership have their accounts frozen and explained that he and his colleague Eamonn Richardson have to act within the rules governing the process.

Mr Wallace and Mr Richardson have said they will pay for stock that Superquinn held once they were appointed on Monday, and for deliveries received while they are in control of the company.

Mr Wallace said they had paid suppliers who were facing difficulty. They also accelerated payments to creditors who have retention of title or some other form of security over their goods.

“We have changed payment terms to give suppliers that are facing difficulty cash for orders,” he said. Unless the banks involved – Bank of Ireland, AIB and National Irish Bank – make an exception, it is unlikely creditors whose cheques were not honoured will be paid.

One creditor confirmed that he lodged a cheque for a sum in excess of €20,000 last week that bounced. He is due further payment for previous deliveries and for stock that he has provided which is held by Superquinn.

The issue is further complicated because he uses invoice discounting. Under this system, the banks advance cash to his company against invoices that he has issued, and then take the payment when the bill is paid. This means that he now owes the bank the money it advanced to him against his Superquinn invoice.

Mark Fielding, chief executive of ISME, said his members had cheques for sums varying between €7,000 and more than €30,000 returned to them.

He confirmed that many had invoice discounting arrangements with their banks and were facing added difficulties as a result.

“The irony is that in many cases our members are dealing with the same banks that appointed receivers in the first place,” he said.

Meanwhile, Musgrave said yesterday that it would offer Superquinn suppliers opportunities to sell to its SuperValu, Centra and Daybreak franchise networks.

The company has established a working group at its headquarters in Cork to deal with any supplier interested in doing business with its stores.

The company has not revealed what it has agreed to pay for Superquinn, but it has emerged that it intends to invest about €20 million in the business if it takes it over. The deal is subject to approval by the Competition Authority.

Superquinn shareholders that are attempting to halt the receivership by having the business placed in examinership are due to submit their independent accountant’s report to the High Court today.

Examinership applications must be supported by an accountant’s report showing that the business in question has a reasonable prospect of survival.