The High Court has appointed an interim examiner to the company that operates the Iceland chain of retail stores in the Republic.
The court heard that Metron Stores Limited is insolvent and unable to pay estimated debts of €36 million as they fall due.
The firm has got into difficulties recently due to factors including a recent order served on it by the Food Safety Authority of Ireland (FSAI) requiring it to withdraw all imported frozen food of animal origin from its stores.
However, an independent experts report has stated that the company has a reasonable prospect of survival if certain steps, including the appointment of an examiner, are taken.
Mr Justice Michael Quinn on Tuesday appointed chartered accountant and insolvency expert Mr Joseph Walsh as interim examiner to Metron Stores, which operates 26 Iceland stores in the Republic of Ireland and employs over 344 people.
Petitioning the court for Mr Walsh's appointment, Ross Gorman BL for the company, which specialises in selling frozen foods and groceries, said that it had decided to seek the protection of the courts due to issues including last week's decision by the FSAI decision to serve a notice on it.
That notice required to company to withdraw and recall all imported frozen foods of animal origin from all its stores brought into Ireland since March 3rd last year.
Alleged breaches of legislation
Counsel said the FSAI's move was a precautionary step caused by several alleged breaches of food legislation.
The company has "fully complied with the terms of the FSAI notice," Mr Gorman said, adding that his client has identified 239 products out of a full range of 3,000 items that may be in breach of EU regulations.
The reason behind the alleged breaches is that the products in question were imported into the UK and then the Republic.
The only veterinary certificate in place on those items are from the UK, Mr Gorman said.
In order to comply with EU regulations, the items need veterinary certification from within the EU.
Had the items been imported from Northern Ireland then the issue would not have arisen, counsel said.
Mr Gorman said the company has taken steps to address the issue and obtain the appreciate certification, so the items comply with FSAI requirements.
As part of its efforts, the company has engaged with the FSAI and has identified a new Irish based supplier of frozen foods, he said.
The company believes that over 25 legal actions against it, including personal injuries claims and litigations threatened and brought by some of its landlords will result in it potentially sustaining significant liabilities.
Significant losses
The company has suffered significant losses in the last two years, as a result of a high-cost base.
Other issues that had cause the company financial problems are various employment issues, including a strike at one of its stores.
Mr Gorman said these issues have been mainly resolved.
Counsel said the independent report, prepared by insolvency expert Cormac Mohan, stated that the company can continue to survive if a scheme of arrangement can be agreed between the company's creditors and if fresh investment can be secured through the examinership process.
In addition, the company would also have to have leases of loss-making stores repudiated or renegotiated.
Counsel said the company's main debtor it its owner and sole shareholder Project Point Technologies Limited (PPTL), which is owed €34 million.
It also owes some 44 trade creditors €1.7 million, as well as over €230,000 in rates.
It acquired, and then entered into a franchise agreement regarding Iceland's Irish stores from the UK company Iceland Foods Limited, earlier this year.
Counsel said that since the purchase the new owners have been taking steps to address losses sustained in recent years and restructure the business.
It has implemented and identified €6m in savings but is still loss making, counsel said.
Counsel said that the appointment of an examiner would be in the best interests of all the relevant parties and would give the company the best opportunity of surviving.
The company is also confident that it can obtain the fresh investment it requires.
The matter will return before the courts in two weeks' time.
