A proposed rescue package for troubled Cavan Crystal Glass Limited has collapsed following differences between potential investors. It was alleged in the High Court that an English company, Bonaire, had "reneged" on the investment agreement to put £400,000 directly into the company.

Mr Justice McCracken yesterday ended the court's protection of the company, which employs 80 people. It is expected that the receiver previously appointed to the company by Ulster Bank, its largest creditor, will now go back into the company.

The judge was told that, in view of differences between potential investors, the court-appointed Examiner to the company, Mr David Hughes, found he could not recommend approval of the rescue package.

When the rescue proposals were presented to the High Court for approval on July 15th last, Mr Hughes said that there would be new investment of £1.45 million so that the company could trade as a going concern.

The rescue scheme envisaged that the investors would include Mr Neil McKay, Woodlawn Park, Dungannon, Co Tyrone; Mr Tommy Hewitt, Dublin Road, Cavan; Mr Gerry Burns, Townhall Street, Cavan, and Mr John Maher of Freshford, Co Kilkenny.

The final investor was to be Bonaire Communications Limited or a company nominated by it to manufacture the company's crystal designs subject to Bonaire "procuring" that the sum of £400,000 was available for the promotion and development of such a business. Yesterday the court was told that differences arose following a press release issued on July 20th last by a London firm of accountants, Sloan and Co.

The release was issued by the "manufacturing consortium" headed by Sir David Sloane and Mr Martin Fursey which claimed it had originally offered £2.2 million for the entire company.

It claimed the "manufacturing consortium" had never undertaken nor would it agree to invest in Cavan Crystal. Rather it had signed an undertaking to form a new company, lease the existing factory, equipment, shop and office and acquire the name and copyright in all designs of crystal.

It also wanted to rent a further 2,200 square feet in the company's Heritage Centre when completed and introduce £300,000 initially in the new company with a further £100,000 if and when needed.

Mr Padraic Clarke, for the Examiner, said there was clearly a breakdown of negotiations between investors. As there was no agreement at this point between them, the Examiner had come back to the court and was stating he could not recommend approval of the rescue package.

Mr Grainne Clohessy, for the Revenue Commissioners, supported the Examiner's decision.

Mr Martin Hayden, for Mr Hewitt and Mr Burns, said his clients had been disturbed by the Sloane press release. He read a letter issued on behalf of his clients which stated both were "ready, willing and able to proceed and have consistently maintained that position since first entering discussions with the Examiner. The only doubt which arose was cast by Sir David Sloane in his press release."

Mr Hayden said his clients lived locally and had been prepared to go with the Examiner's scheme.

Mr Justice McCracken said that from what he had seen in the correspondence he did not think Mr Hayden's clients were reneging.

Mr Michael Cush, who represented the company, said that a similar situation existed as far as Mr McKay was concerned. Like Mr Hewitt and Mr Burns, Mr McKay's money was there for investment.

Mr Cush said he did not think the company was in a position to disagree with the conclusion reached by the Examiner. He said the matter of costs would have to be determined and he believed the company would be able to satisfy the court that Bonaire had reneged on the investment agreement.

Mr Justice McCracken said that to some degree that might rely on an interpretation of the investment agreement.

Mr Charles Meenan SC, for the company's largest creditor, Ulster Bank, said it appeared that £400,000 was not going to be invested in Cavan Crystal but in another company and that would have been to the detriment of his clients.

Mr Justice McCracken said it appeared there was no representation on behalf of Bonaire in court. It appeared that a condition for approval of the scheme was that Bonaire put cash into the company rather than what was in the press release. Mr Meenan said the court should make an order ending the protection. Mr Justice McCracken made the order and adjourned the question of costs until later this year.