The Superquinn directors seeking to block the Irish food retailer from being put into receivership have ended their legal challenge.

Five Superquinn directors said today (27 July) that they had decided to withdraw their High Court petition after prospective buyer Musgrave Group set up a EUR10m fund to support the troubled retailer’s suppliers.

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The company’s directors went to court on Friday (22 July) to stop Superquinn being put into receivership.

They claimed the receivers, Kieran Wallace and Eamonn Richardson of KPMG, had not been properly appointed and they were seeking to move Superquinn into examinership.

Such a move would have placed Superquinn, which has owes around EUR400m (US$575.5m) to three banks, under High Court protection from all creditors for up to 100 days.

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The Superquinn directors said they had sought to challenge the receivership decision to secure a better outcome for the “many suppliers who over the years have provided Superquinn with the quality produce it is renowned for.”

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“With the support fund in place, we now believe that the receivership process is in the best interests of our suppliers, colleagues and the many other partners of Superquinn and are happy to support the process,” the directors – Kieran Ryan, David Courtney, Terry Sweeney, Bernard Doyle and Jerry O’Reilly – said.

Musgrave said its EUR10m fund will help suppliers that have experienced losses as a result of Superquinn going into receivership but that are not covered by credit insurance. The fund, Musgrave said, is contingent on the successful purchase of Superquinn by Musgrave.

“We are aware of the financial challenges currently being experienced by certain suppliers. This fund, in addition to access to our store network, will limit the exposure of these suppliers and will assist those companies that are in distress,” said Musgrave CEO Chris Martin.