Business

Court asked to wind up related chain finance companies after creditors reject survival scheme

It was claimed firms suffered losses due to defaults caused by fraud and clients entering insolvency

The court previously heard, however, investors in the businesses had concerns about the firms going into examinership. Photograph: Bryan O'Brien

Aodhan O'Faolain
Fri May 12 2023 - 18:10

The High Court has been asked to wind up two related companies involved in the supply of chain finance to Irish and international funds after proposed survival schemes were rejected by one of the firm’s creditors.

Earlier this year, the High Court appointed insolvency practitioner Declan McDonald, of PwC, as examiner to Dublin-registered Tower Trade Finance Ireland Limited (TTFI) and associated company Deal Partners Logistics Ltd (DPL).

The firms sought the protection of the courts from their creditors after getting into financial difficulties caused by the collapse of the JACC Sports Distributors, the firm that supplied sports kit to the Football Association of Ireland (FAI) for Ireland’s national teams. JACC went into liquidation last year.

The court previously heard, however, investors in the businesses, which owe their respective creditors over €13 million, had concerns about the firms going into examinership.

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On Friday afternoon, solicitor Gavin Simons, of Amoss solicitors, for Mr McDonald, told Mr Justice Brian O’Moore that the proposed scheme of arrangement for TTFI had been rejected by its creditors at a meeting earlier on Friday.

As a result, Mr Simons said the examiner was of the view that the process should not continue any further and the firms should be wound up.

Mr Simons said a scheme had been agreed in respect of DPL but, given the nature of the relationship between the firms, both schemes needed to be approved to allow the examinership process to progress any further.

Declan Murphy BL, for the firms that had petitioned the court for the appointment of an examiner, agreed the only option left in light of the decision of TIFF’s creditors to vote against the proposed scheme was to end the examinership and make orders liquidating the companies.

Counsel said Mr McDonald should be appointed as liquidator to the firms.

Solicitor Gavin Smith, of DLA Piper, who represented over 31 creditors of TFFI asked the court for a short adjournment.

[ Four years, five courts, 29 judges... the Burkes of Castlebar and their never-ending legal battles ]

This, Mr Smith said, would enable him to get instructions on whether his clients wanted a different person to act as liquidator or if they were satisfied for Mr McDonald to act in that capacity.

Mr Justice O’Moore agreed the application to wind up the firms should be adjourned for a short period to allow Mr Smith to take instructions from clients who he said were owed a significant amount of money.

The matter was put back to Monday, with the protection of the court to remain in place till then.

TTFI advanced trade finance through loans or by purchasing goods and selling them on to help clients expand their business via a safe trading mechanism.

DPL was created to raise funds from individual shareholders.

Since their foundation in 2013, the firms had traded successfully.

Problems arose in 2021 and 2022, however, which dragged down the performance of the businesses.

It was claimed the firms suffered losses due to defaults caused by fraud and clients entering insolvency.

The court heard that DPL suffered a loss of €7 million following JACC’s liquidation.

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