A BID to save the jobs of 566 workers at linen supply centres throughout Ireland has begun following a High Court hearing yesterday.
Mr Justice Barry White appointed Kieran Wallace, of KPMG Restructuring, as examiner to Linen Supply of Ireland Ltd, after hearing the company had a reasonable prospect of survival.
Barrister Brian Kennedy, counsel for Linen Supply, said it was the leading supplier of sheets, towels and washroom hygiene products as well as sterile surgical supplies to the hotel and healthcare sectors.
He said it currently carried on operations in Spiddal, Co Galway, Galway city, Cork, Limerick and Sligo as well as four centres in Dublin – Park West, Naas Road, Wilton and Fonthill.
He told the court Linen Supply, formerly known as CWS-Boco Ireland Ltd, was a subsidiary of a German company which employed 50,000 people worldwide and had a turnover of €779 million per annum.
Mr Kennedy said Linen Supply suffered trading losses in 2007, 2008 and 2009 as a result of a decline in the hospitality sector and in its workwear sales and sterile and surgical supplies, as well as floor care and washroom sales. It currently had net liabilities of €0.7 million.
He said that due to the nature of the business the company had a very high fixed cost base, as a result of a high staff count and properties leasing costs, which had not fallen in proportion to the decline in turnover.
The estimated realisable value of the company’s assets at August 30th was €9.9 million with estimated liabilities of €61.3 million, which included €55.9 million to unsecured creditors.
The unsecured figure included a debt of €29 million to the parent company and provision for lease obligations of €19.6 million.
Mr Kennedy said the company was a member of the German-based Franz-Haniel group and was currently operating with the financial support of parent company CWS International, another member of the group. CWS had recently made known its intention of withdrawing support in the absence of a restructuring through examinership.
As a result, the company was unlikely to be able to pay its debts. Its current staffing levels and overheads were excessive having regard to the current requirements of the Irish market. CWS International had indicated its commitment to making necessary funding available to the company during examinership to facilitate an overall restructuring.
Judge White told Mr Rossa Fanning, counsel for the examiner, he was satisfied the company had a reasonable prospect of survival and that it was clear there would be internal investment and recapitalisation of the company.
