Interim examiner appointed to Ramona Nicholas’s Cara pharmacies

The High Court has appointed an interim examiner to the Cara group of pharmacies, which employs more than 160 people.

The group's directors are former RTÉ Dragons' Den investor Ramona Nicholas and her husband Canice Nicholas.

They had opposed the application for the interim examiner’s appointment, brought by Elm Corporate Credit DAC, the group’s lender and largest creditor.

On Friday, Rossa Fanning SC, for Elm, said the Cara group had been loss making every year since 2016, and was insolvent. The best course of action to save the business and the jobs was the appointment of an examiner, counsel said.

Aillil O’Reilly BL, for Cara, asked the court to adjourn Elm’s application for the appointment of an interim examiner.

He said the directors were very concerned about the impact it would have on employees and the communities they serve, as well as their own professional reputations.

The directors also considered the negative portrayal of Elm of the group’s financial system as “overstated”, he said.

Mr Justice Mark Heslin said he was satisfied to appoint insolvency practitioner Ken Tyrell of PWC as interim examiner to Cara Pharmacy Unlimited Company, and a dozen related companies.

The court was not prepared to adjourn the application to appoint an interim examiner, he said.

Noting the objections raised by the company, the judge said his decision “in no way impugns” the director’s reputations, skills and professionalism.

He noted that an independent expert’s report which stated the group, which operates 13 pharmacies and provides prescriptions to nursing homes, has a reasonable prospect of survival if certain steps are taken.

Those include the restructuring of the business, fresh investment in the group, and court approval for a scheme of arrangements put together by an examiner with the group’s creditors.

The appointment of an examiner, Mr Fanning said, was in the best interests of all the stakeholders, including the 160 employees. Two parties are interested in investing in the group, counsel said.

Counsel said Elm was prepared to provide sufficient funds during the examinership period on terms including that any such monies be certified by the examiner.

In the event the group is wound up there would be a deficit of €16.3 million.

Counsel said Elm is owed €14 million by the group, due by the end of the year. Other creditors include suppliers, landlords and local authorities, counsel said.

Counsel said the group had pre-tax losses of €4.6 million between 2016 and 2019.

Its losses were partly due to the challenging retail trading environment, deficiencies in stock control, and an unsustainable cost base.

The group had struggled to grow sales, and changes by the group's main supplier United Drug to its payment terms had a negative effect.

There was a big gap between its budget and actual revenues, which counsel said had undermined Elm’s confidence in the group’s management.

The Covid-19 pandemic had exacerbated matters, counsel said.

Earlier this year, the group missed scheduled repayments totalling €360,000 to Elm, he added. Elm sought proposals from the group, but none have been received.

Elm was concerned by a lack of explanations over items including a €83,000 directors loan made when the group was experiencing cash-flow problem, a payment of €100,000 to somebody outside the group, and 37 cheque payments totalling €804,000.

Counsel said given the group's financial situation, any objections to the appointment of an examiner were "unrealistic" and akin to King Canute "telling the sea to go back."

The judge adjourned the matter for two weeks and said any objections to the examinership process can be heard then.