The disarray at the heart of Rathwood has begun to emerge, with the High Court hearing that thousands of customers of the financially struggling home and garden retailer on the Carlow-Wicklow border are owed as much as €2.5 million.
With the company’s debts standing at close to €20 million and secured creditors including Revenue and Bank of Ireland first in line for repayment, as many as 4,000 people holding out for refunds have an anxious wait to see if they will get anything back.
Court papers suggest the root cause of the company’s difficulties are readily identifiable and Rathwood does have a future if the problems that have beset it since late 2024 can be overcome.
Rathwood had been a quietly profitable enterprise for three decades but things started to fall apart 18 months ago when a company called Mercer entered administration in Northern Ireland.
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It supplied 70 per cent of the stock the family-owned retailer sold and when times were good offered decent terms of credit.
After it entered administration, the impact was immediate and devastating, with Rathwood’s supply chain collapsing and the administrator seeking the immediate repayment of €3 million owed to Mercer.
The domino effect kicked in with Rathwood as it struggled to rebuild its supply chain and meet debt repayments amounting to tens of thousands of euro a week, putting other creditors and customers on the long finger.
In an affidavit, garden and home furniture wholesalers Paleo Furniture and Anhui DW Living, creditors owed more than €3 million between them, said “as a result of the cash flow pressures” the company started using “customer deposits to satisfy the arrears owed to trade creditors”.
There were inevitable delays in processing orders which led to significant disquiet among customers, including many who contacted this newspaper to complain and even more contacting consumer watchdog the Competition and Consumer Protection Commission, to voice concerns.
The problem was further magnified as customers instigated chargebacks – a process which sees banks return money for goods paid for but never received before subsequently pursuing the merchant’s bank for the cash. That led to restrictions on Rathwood’s credit facilities, which compounded its difficulties.
Court papers noted that “while the company has made significant losses in the last 18 months the reason for this are clearly identified but can be rectified”.
Paleo and Anhui said there was “a clear demand for the company’s products” and before it had difficulties with the supply of goods, it was a profitable business.
In a responding affidavit Rathwood’s managing director James Keogh said he had “worked endlessly” to resolve the problems and apologised and recognised “the significant number of dissatisfied customers”.
He stressed the family had worked long hours and poured in hundreds of thousands of euro of their own money to keep the business going.
Only time will tell if it is enough.
