THE HIGH Court has granted Chartbusters home entertainment stores permission to seek orders revoking lease agreements it had entered for a number of it outlets.
The court heard that if the lease agreements, for premises that the company no longer needs, are terminated, it will allow the examiner of Chartbusters to finalise a scheme of arrangement that will allow the company to trade in the future.
If the scheme is approved by the company’s creditors and the High Court, Chartbusters will be restructured and 23 of its 36 store may be saved.
Mr Justice Garrett Sheehan yesterday granted the company, which was successful in its application for examinership in January, permission to serve short service to all relevant parties, including the court-appointed examiner, of the proceedings.
The judge made the matter returnable to Thursday. Yesterday’s application was made on an ex-parte (one side only) basis.
In an affidavit to the court Richard Murphy, a director and shareholder of Chartbusters, said the examiner, Neil Hughes, had indicated to the company that before he could finalise a scheme of arrangement, it should apply to the High Court to have several of the company’s leases repudiated.
Mr Murphy said he believed the examiner intended to include any outstanding liabilities of the landlords of the premises as unsecured creditors in the proposed scheme of arrangement.
The premises Chartbusters leased include premises at at Golden Island Shopping Centre in Athlone; Carrigaline, Co Cork; Christchurch, Dublin; Crescent Shopping Centre, Limerick; the Maple Centre, Dublin; Anne Street, Newbridge, Co Kildare; O’Hagan House, Ranelagh, Dublin; and Terenure Place, Dublin.
The stores in Athlone and Carrigaline were closing, while the stores in Newbridge, the Maple Centre and Terenure were now closed. The premises in Christchurch, Limerick and Ranelagh were never occupied.
Mr Justice Peter Kelly appointed Mr Hughes examiner to the group on January 26th last.
The company and six related firms, including tanning and weight-loss outlets, had applied for the protection of the court after it was revealed it had debts of some €20 million.
The court heard the group was insolvent and would have a shortfall between assets and liabilities of some €246,000 as a going concern and of some €4.8 million if wound up.
Mr Justice Kelly was informed that the company had a reasonable prospect of survival once certain conditions were met.
An independent accountant reported that the company and related firms could survive as a going concern with new investment, closure of underperforming stores, negotiations with landlords and acceptance of an appropriate scheme of arrangement by the creditors.
Chartbusters was incorporated in 1993 as a video rental business, and operated 36 stores with more than 260 employees.
It told the court that as a result of competition and changes in technology, it later diversified into internet services and tanning booths.
The application for examinership was opposed by two substantial creditors – Winchurch and Lombard Ireland, who are owed some €1.8 million between them, while other creditors owed some €18 million between them, including the Revenue, adopted a neutral position.