Ferry group wins court protection

 

The companies operating the Cork Swansea ferry service have secured High Court protection amid predictions they will make a profit next year having abandoned loss-making sailings and implementing other cost-saving measures.

The Munster region benefitted by about €18 million this year from a boost in tourist numbers connected with the ferry service, while the companies’ freight service gives businesses based in the south-west a corridor from Cork to the UK and beyond, the court heard.

About 70 people, mainly crew members hired through a Polish agency, are employed by the companies. The Cork-Swansea ferry, the MV Julia, is now in port until a new schedule of 200 sailings annually begins next April, to run to the end of September.

Mr Justice Peter Kelly said he was satisfied to grant court protection to Fastnet Line Ship Holdings Ltd (100 per cent owned by the West Cork Tourism Co-operative Society Ltd) and related companies operating the ferry service based at Ferry Terminal, Ringaskiddy, Co Cork.

He also granted an application by Ross Gorman, for the companies, to appoint an interim examiner but stressed he was doing so only because West Cork Tourism Co-operative Society’s willingness to invest further monies into the service was conditional on an interim examiner being appointed.

If those funds were not made available, the proposed survival scheme would fall apart, the judge said. That was the only basis to appoint an interim examiner in this case, he added.

The judge said it seemed many people believe interim examiners have more status than they actually do. Interim examiners may only examine, have no executive responsibilities, are costly and the practice of seeking their appointment “as a PR exercise” was to be deprecated.

Earlier, the court heard the Fastnet companies are insolvent with a deficit of some €10.3 million on a going concern basis, rising to about €13.2 million in a winding-up scenario.

The companies said their difficulties were due to several problems including start up costs overruns and because they had operated an all-year round service in 2010 in line with recommendations of a firm of independent consultants in a “flawed” report commissioned by the Port of Cork.

It became apparent during that first year the ferry was running at a significant loss outside the high season, the companies said. A new business model would involve 200 annual sailings, down from 280, between April and September only.

The companies said they also incurred higher than expected legal and other costs associated with accepting professional advice to put in place an unwieldy group company structure. Other problems included high fuel costs and less on-board sales and freight traffic than expected.

Earlier this year, the companies’ changed their business model to reduce the number of sailings and staff numbers (from about 120 to about 70), increase marketing efforts and alter marketing strategy to focus on short and mid-week breaks and change the product lines available for sale on board. Further investment was also obtained.

Those measures led to turnover of €6.8 million between March and September last and the companies said they were confident of achieving profitability from next year onwards. An independent accountant also expressed the view they had a reasonable prospect of survival subject to conditions, including securing investment and the continued support of Aktia Bank, Finland, which has a first charge over the ferry ship.