An examiner to Rathwood, the troubled Carlow-based home and garden centre, has been approved by the High Court.
Provisional figures provided to the court suggested the company has liabilities totalling €18 million, including €10 million owed to trade creditors, €1.4 million to the Revenue Commissioners and €2.5 million in customer deposits and vouchers.
Confirming the appointment of Strata Financial’s Padraic Bermingham as examiner on Friday, Judge Rory Mulcahy said he was satisfied the company had a reasonable chance of survival, although he noted this was “entirely contingent” on external investment.
For the High Court to appoint an examiner, it must be satisfied that the company in question has a reasonable chance of survival.
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In his ruling, the judge noted concerns raised by Revenue regarding corporate governance at the company. Lawyers for the company denied any wrongdoing.
Rathwood is a family business, controlled by couple Carmel and Patrick Keogh, of Rath, Tullow, Co Carlow, and their two sons, James and Thomas. The company employs 71 people, although its current difficulties have resulted in lay-offs.
The appointment comes after two creditors of Rathwood, Paleo Furniture Company Ltd and Anhui DW Living Company Ltd, petitioned the court to place the company in examinership. The two creditors are owed a combined $3.3 million (€2.8 million), according to court documents.
At Friday’s hearing, barrister Stephen Brady, appearing for Bermingham, said his client had received nine expressions of interest from potential investors in the company. In a report provided to the court, Bermingham stated that the company had a reasonable chance of survival, but said this was “singularly based on onboarding an external investor”.
In his report, Bermingham estimated the company’s total liabilities at €18,295,186. The estimated value of the company’s assets do not exceed €3 million, he said.
Barrister Keith Farry, appearing for Rathwood, said his client acknowledged and apologised to the customers impacted by the examinership process. Counsel said his client denied any suggestion of corporate governance issues at the firm.
Farry submitted that factors beyond the company’s control were to blame for the position it found itself in, pointing to a “chain of events” set off by a Northern Ireland-based supplier of the firm being placed into administration.
Farry said his client was not opposing the application to appoint an examiner, adding that the company was ready to engage in the process.
In a sworn statement to the court, James Keogh said he was “devastated” at the trust broken between Rathwood and “30 years of customers and friends”.
“[W]e did everything we could to fix the issue,” he said.
Sally O’Neill, barrister for Revenue, said her client, on foot of extensive correspondence with Bermingham, was satisfied not to oppose his appointment.
O’Neill said her client had concerns relating to corporate governance at the company, including alleged reckless trading and breaches of fiduciary duties. She said an audit of the firm was nearing completion, but given the evidence before the court, that may be delayed.
Counsel said the examiner had been “up front” and said that the company will not be able to “wash its face” during the examinership process.
Ross Gorman, barrister for the petitioner companies, submitted that there was sufficient evidence before the court to show the company had a reasonable chance of survival.
Arthur Cunningham, counsel for creditor National Seaways Freight Ltd, said his client was not opposing the application to appoint Bermingham.
The case will return in June.
