BATHROOM FITTINGS manufacturer Qualceram Shires is likely to be broken up as a result of seeking protection from its creditors on both sides of the Irish sea yesterday.
The company announced yesterday that its Irish operations have been placed in examinership, while those in Britain were placed in administration.
David Hughes of Ernst Young has been appointed interim examiner to the company and its Irish-registered subsidiaries. The issue is due before the High Court on April 20th.
Robert Hunter Kelly and Jonathan Sumpton of Ernst Young LLP have been appointed as administrators to British subsidiaries Qualceram Ltd and Shires Ltd.
As both processes could have different outcomes and operate under different company law codes, sources said yesterday that it is likely that the group’s British and Irish businesses will be split.
The moves give both divisions of the business court protection from creditors in both Ireland and Britain.
Qualceram had been in talks with its landlord WM Carey and its banks seeking the waiver of some of the conditions of its lease that would allow it to sell surplus property close to its Wicklow base, which would allow it to raise cash.
This would have resulted in its landlord being able to call in letters of credit for €2.6 million, obliging the company to pay WM Carey this sum. The group wanted this waived. The banks were involved as they issue the letters of credit.
It said a number of weeks ago that the talks were proving “challenging” and said it was examining its options, which it was understood at that stage included examinership or some other form of insolvency proceeding.
On Tuesday it announced that it was delisting its shares from the Irish Stock Exchange. This was seen as a precursor to yesterday’s move.
The company depended heavily on new house building for its business, and the slump in this sector hit sales and earnings.
Companies are placed in examinership if they are insolvent, but still have a reasonable chance of survival. The process allows the examiner up to 90 days to come up with a rescue plan that is then voted on by creditors before going to the High Court for final approval.
Administration is a system used under British law for insolvent or troubled companies.
It is also geared at rescuing the business, but its focus is on repaying creditors, while the examinership system is aimed at saving the business and as many jobs as possible.
