A petition to secure High Court protection for the Ina's Kitchen Desserts chocolate products company was done in secret from the board of the firm, the High Court was told.
The company is trading and no one is refusing to trade with it, while it also has a plentiful supply of finance to meet its requirements, Bernard Dunleavy SC for the majority shareholder, Starkane, said.
Starkane knew nothing of the petition for examinership from director and ten per cent shareholder Barry Broderick until it was moved, counsel said. It was against this background that the court must be scrupulous in ensuring that it is presented with a genuine insolvency, he said.
Mr Dunleavy was making submissions on the second day of a hearing before Mr Justice Michael Quinn over whether the court should approve examinership for the firm, which was set up 26 years ago by Ina Broderick, Barry's mother. The application is supported by Ina, her husband Michael and Barry's brother Bernard, who are also shareholders.
It is opposed by Starkane, which was incorporated by the BDO Capital Development Fund as a special purchase vehicle to acquire shares and put money into the company. It now owns 75 per cent of the shares.
Based in Tallaght, its registered business names are Ina’s Kitchen Desserts, Broderick’s, Ina’s Handmade Foods and Broderick’s Handmade. It employs 107 people.
Accumulated debts
In the petition, it is claimed that court protection is required to restructure the company and deal with accumulated debts of nearly €9 million.
It has been forced to postpone payments to Ulster Bank, a secured creditor owed €2.6 million and neutral on the petition, and to Revenue, owned some €407,000, the court heard.
In 2018, it had to get an extension of its facilities from Ulster Bank in order to pay wages to its employees at Christmas.
This year, the company found itself obliged this year to avail of the Covid-19 pandemic payment for employees, the Temporary Wages Subsidy Scheme.
This, it is argued on behalf of the petitioner, amounted to an admission by the company of being unable to pay its debts as they fell due.
Mr Dunleavy, for Starkane, said there is no meaningful insolvency, and examinership should not be approved.
Starkane is committed to this company, and cannot recover the substantial investment it made unless it gets a significant degree of profitability, he said.
Control
Tony Proudfoot, a director of Ina's Kitchens, says in an affidavit the petition is entirely unwarranted in circumstances where court protection is not needed.
He said the application is, in truth, an effort by the Broderick family to "wrestle back control" of the company, in circumstances where they have abandoned earlier threats to bring proceedings against Starkane arising out of substantially the same issues.
Prior to Stakane taking over the management of the firm, it was facing imminent failure and liquidation and this petition represented a threat to its success "by seeking to wind the clock back to 2017, when the Brodericks were at the helm."
An expert report prepared for the company showed it was not insolvent having regard to the nature of the debt to Starkane, he said.
The company had no pressing creditor payments and was able to meet its creditor obligations, which was particularly significant given the commitment of its funders to support it, he said.
The hearing continues.
