The sale of Irish retailer Superquinn is in doubt after two of the company’s directors went to court to block the business from being put into receivership.
At Ireland’s High Court today (22 July), the directors claimed the receivers, Kieran Wallace and Eamonn Richardson of KPMG, had not been properly appointed.
The directors, David Courtney and Kieran Ryan, are also seeking an injunction to stop the receivers – who were appointed by Superquinn’s creditors – from running the business and from pushing ahead with a plan to sell the retailer to local rival Musgrave Group.
On Tuesday, the receivers said Musgrave, which owns the SuperValu chain in Ireland, had agreed to buy Superquinn, which runs 24 stores in the country.
Courtney and Ryan want Superquinn to move into examinership rather than receivership. Examinership would place Superquinn, which has owes around EUR400m (US$575.5m) to three banks, under High Court protection from all creditors for up to 100 days.
However, a third Superquinn director, Simon Cantrell, told the High Court this morning that he did not agree with the request for Superquinn to move into examinership – despite his name being included in the petition.
The High Court will hold a hearing on Tuesday to rule on the directors’ application for the injunction. On Thursday, it will decide whether to place Superquinn in examinership.
The banks, the National Irish Bank, the Bank of Ireland and AIB, said they believe the move to place Superquinn into receivership and to sell the retailer to Musgrave represents “the best possible outcome” for the company.
“[It] is the only rational solution to ensure continuity of the Superquinn business,” the banks said. “It protects and preserves the 2,800 jobs with Superquinn and protects and ensures constinued trading for all of the Superquinn stores in Ireland. In addition, there is a guarantee for full payment of suppliers for future supplies to Superquinn.”
The banks added that the examinership “will put all of these future assurances at risk”.
As well as preparing for next week’s court hearings, the receivers are also faced with the search for a new chief executive for Superquinn.
Andrew Street, who was appointed Superquinn CEO in December, was reportedly unhappy with how the receivers were treating the retailer’s suppliers and has decided to leave the business.
In an email sent to Superquinn’s staff and seen by The Irish Times, Street hit out at the banks and the receivers.
“The receivership process that has been imposed on the business by the bank syndicate is not being conducted in a way I find acceptable,” he wrote, according to the newspaper.
“This particular process has been selected by the banks concerned in order that they can secure the maximum amount of the sale proceeds for themselves. This is being done at considerable cost to our suppliers. The board of Superquinn has made it clear consistently to the banks that they do not support this approach.”
Street wrote that it had been “distressing” to see “queues of suppliers” at Superquinn’s offices to see if they would be paid and “in many cases, being turned away empty handed by the receiver”.
He claimed that the banks had refused to consider using some of the proceeds from the planned sale of Superquinn to Musgrave to pay suppliers in full, the newspaper said.
The former Superquinn chief also insisted the receivership process was “causing havoc” to the retailer’s supply chain, with “inevitable sales consequences”.
Moreover, in the letter, Street said he was “no longer able to work” with KPMG’s Wallace.
The receivers, however, claim they are “accelerating payments where possible” for suppliers who are “experiencing difficulties”.
PR representatives for the receivers yesterday issued a statement that said six more suppliers had “declared their support” for the Musgrave deal.
The three trade unions representing Superquinn’s staff have also backed the sale. “Musgrave has the necessary retail expertise and capital not only to purchase Superquinn but to inject much-needed capital investment into the stores,” the Mandate, Siptu and Bakers unions said today (22 July). “In so doing, [Musgrave] represents the best prospect for the long-term security of employment of the 2,800 Superquinn employees and their families.
“We believe that any continuing confusion or uncertainty surrounding the future ownership of Superquinn at this time will damage the future viability of the company in the eyes of staff, customers, banks and suppliers and may have long term consequences for employment there.”
On Street’s decision to step down, KPMG’s Wallace said: “It is regrettable that, despite Mr Street’s commitment to staff and customers earlier this week that he would continue to lead the business into the future and would work with the joint receivers, he has chosen to step aside from the business.
“All of the remaining senior management have confirmed their commitment to working with Superquinn and the loyalty shown by senior management and all of their colleagues across the business is greatly appreciated by the joint receivers. We are moving quickly now to appoint a new person to lead the business in due course.”