The High Court has appointed a provisional liquidator to a firm which supplies kit from the national football teams and others over debts of €13.3 million.
JACC Sports Distributors Ireland supplies jerseys and sportswear for the Football Association of Ireland (FAI) which is worn by the national teams and is the firm's most valuable contract.
It also has a number of other club supply deals, including with Connacht Rugby, smaller League of Ireland clubs as well as a valuable contract with the FAI's exclusive retail partner, Elverys.
The FAI last Monday terminated its contract which the court heard effectively meant JACC had to close.
On Wednesday, JACC's largest creditor, Deal Partners Logistics Ltd - owed nearly €7.3 million - petitioned Mr Justice Brian O'Moore to appoint a provisional liquidator to the firm in circumstances where there was serious concern about the running of the company and its failure to meet debt repayments over the last few months.
The judge adjourned it to Thursday so that JACC could be notified of the petition and represented.
On Thursday, the judge said it came as "some surprise" that there was no appearance on behalf of JACC.
There was however an appearance by a solicitor for Ulster Bank - owed €3.8 million - which was not opposing the appointment of the provisional liquidator and for the Revenue - owed €2.5 million, - which was reserving its position on the application.
Mr Justice O'Moore was satisfied to appoint Aengus Burns of Grant Thornton as provisional liquidator and the application to confirm the liquidator was adjourned for a week.
He was satisfied that the directors of the JACC had been properly served and that the application to appoint the provisional liquidator had been effectively communicated to the company.
The two shareholders and directors of JACC are Jonathan Courtenay, Whites Road, Castleknock, Dublin, who owns 95 per cent of the shares and Patrick Peyton, Diswellstown Manor, also Castleknock, who owns five per cent.
The company had "chosen not to appear" and the concerns the judge said he had raised on Wednesday about the conduct of the business, which could have been explained if there was an appearance, now "take on a great significance", he said.
They included the involvement of the two shareholder directors in two other dormant companies which are in the same business.
It was undoubted that the appointment of a provisional liquidator will be adverse to the company, but the judge said that in his decision a balance has to be struck.
Financial situation
There was no doubt the company was aware of its financial situation as evidenced by an email from its financial adviser last September in which it was stated the business was not viable based on the debt of between €13 million and €14 million that it was carrying, he said.
The email also said options considered were liquidation, a new investor, or examinership.
However, an examinership would trigger the termination of the FAI contract which would effectively mean the closure of the business. The court heard talks with an investor had not been successful.
The judge said he was also concerned that the company drew down some €1 million worth of stock last year, over which Deal Partners said it had title, without accounting to Deal Partners as it was required to under trade and buyback arrangements.
There was a further incident last Monday when JACC applied to remove stock without informing Deal Partners of the termination of the FAI contract, he said.
The court heard the company's main asset is €9 million worth of stock which the petitioner says a provisional liquidator would get control over so that may be some prospect of recovering residual value from other contracts which the company is a party to.
Having considered the evidence before him and in particular where the balance of justice lay, he was satisfied to appoint Mr Burns as provisional liquidator and also granted him most of the powers over the affairs of the company sought by the petitioner.
While he was adjourning the hearing of the appointment of a permanent liquidator to next week, he said there was no guarantee it will proceed because the company may resist the appointment and there may be a dispute about the allegations of the petitioner.
