Court appoints provisional liquidators to heating control installer

The High Court has appointed provisional liquidators to a company that has installed and maintained home heating controllers in thousands of homes.

The appointments were made in respect of Climote Limited, which employs 20 people, after a proposed rescue plan could not be agreed.

One of the company’s main products was a remote heating controller that allows its customers, via an app on their phone, to control their home heating systems to reduce energy bills.

It has sold up to 100,000 of these devices, which require ongoing service and maintenance, the court heard.

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The court was told that if the company entered a voluntary liquidation and ceased to exist there would be nobody to service these products, which could result in severe disruption to householders’ heating systems.

However, the appointment of the liquidators would ensure that its maintenance services would be provided until the firm’s assets have been sold.

The court heard that the company with a registered address at Buttercrane Lane, Dundalk, Co Louth, was profitable until 2019.

It became loss-making in the following years due to factors including the impact of the pandemic, and a decision in 2022 by the Sustainable Energy Authority of Ireland to remove the ‘single-measure solution’ it offered from a government grant scheme known as the energy efficiency obligations scheme.

A further difficulty, that has resulted in cash-flow problems, arose out of a deal the firm entered to supply 5,000 heating control devices to one of its customers.

In 2022 it lost €1.1 million and in the first eight months of 2023 its losses were €870,000.

It also owes a significant debt to Revenue, including warehoused debt.

As a result of its insolvency, the company asked the court to appoint Dessie Morrow and Diarmaid Guthrie, of Azets Ireland, as joint provisional liquidators.

On Thursday, the matter came before Mr Justice Mark Sanfey, who agreed to make the appointments.

The judge was satisfied the company was insolvent and its directors had acted honourably in their attempts to save the business.

Ross Gorman, for the company, told the court the business had entered the restructuring process, known as small companies administrative rescue process (Scarp) to see if a survival plan could be put together.

Unfortunately, counsel said, the Scarp process was not successful.

It was not possible to negotiate an agreement with the firm’s key customer while Revenue, whose approval of the proposed plan was required, had “opted out” of the process.

Counsel said that rather than have a voluntary winding up, the company was seeking the appointment of provisional liquidators, who will preserve its assets.

They will also take steps to ensure that a new entity will be set up, and several employees retained, to continue to maintain and service the firm’s products until its goodwill has been sold.

If the company ceased to trade, counsel said, its computer servers could go down and customers would not be able to use their heating systems.

Given the time of year, counsel said, this is something his client’s directors “want to avoid”.

This was being sought in order to preserve the significant goodwill the business has built up.

Counsel said the firm’s directors have identified an investor willing to acquire the company’s assets for a six-figure sum.

In reply to concerns raised by the judge about a possible link between the existing directors and the new investor, counsel said the liquidators would strive to sell the assets at the best price in the interests of the creditors.

After considering Mr Gorman’s submissions, Mr Justice Sanfey said he was satisfied to grant the orders sought.

The matter was adjourned to a date in November.