Case Study 1: Multi Unit Retailer
This retailer operated from 7 shopping center units and traded profitably for many years before becoming loss making following the onset of recession.
The critical issue faced by the company was being tied into long term upwards only onerous leases at far above market terms. All other variable costs of the business were successfully reduced in line with turnover by the directors but the company was unable to reduce its main overhead; rent.
The company entered Examinership and the weakest trading store was immediately closed. Negotiations took place with other landlords using the framework of the Examinership and reductions of between 50 – 80% were achieved. The reductions were sufficient of themselves to turn around the company’s fortunes and render the company profitable.
A cash business, the company operated at a surplus during the protection period and utilised that surplus to fund a scheme of arrangement for all creditors. The company emerged debt free following the 100 day process with 6 stores still trading and 25 jobs intact.
Case Study 2: Award Winning Restaurant
Jo’burger is a South African barbeque themed restaurant located on the Main Street in Rathmines in Dublin.
The company started trading in 2007 and proved to be immediately popular with its innovative menu comprising of a range of South African themed gourmet burgers, named after districts in Johannesburg. Having traded successfully at its Rathmines premises it went on to open a second restaurant at Main Street Blackrock. The restaurant won numerous awards including The Dubliner People’s Choice Restaurant of the Year 2008.
However, difficulties for the company became apparent in 2009 when it was clear that the Blackrock restaurant was not going to be successful. It was apparent that the location for the new restaurant had been ill-chosen and trade losses intensified.
Notwithstanding the success of the Rathmines restaurant and the awards received, the company became insolvent and entered examinership in September 2009. Neil Hughes Examiner at Baker Tilly Hughes Blake was appointed examiner and the Blackrock restaurant closed.
Over the course of the 100 day protection process, new investment was secured for the company. The company emerged from Examinership in December 2009 following negotiations with the landlord and after reaching unanimous agreement with the trade creditors to pay them a 10% dividend on their debts. The Revenue Commissioners were paid 20% in full and final settlement of arrears.
The scheme was approved by the High Court and Jo’burger began 2010 with 15 jobs intact and all historic creditors fully discharged through the scheme of arrangement.
“We are more than happy to be discussed as a case study to support the advantages of examinership. It is an enlightened piece of legislation, which few people understand. Thanks again for everything.”
Investor and new Managing Director, Jo’burger Limited.
Case Study 3: Hotel
This Company was involved in the operation of hotel, night club and bar in County Wicklow. The Company’s business commenced in 1984 and the hotel traded profitably for a number of years.
However, the following difficulties for the company became very apparent:
- Difficulties in the hotel sector as a whole, including over supply of hotel rooms as a result of tax incentives in the sector
- Management issues
- Significant contingent liabilities as a result of third party claims against the Company
The company became insolvent and entered Examinership in. Neil Hughes Examiner at Baker Tilly Hughes Blake was appointed examiner to the company.
Over the course of the 100 day protection process, new investment was secured for the company from the existing directors. The Company reduced its costs, secured a tax clearance certificate and returned to profitability.
The company emerged from Examinership after reaching agreement with its creditors to pay them a 10% dividend on their debts. The Revenue Commissioners were paid 20% in full and final settlement of arrears.
The scheme was approved by the High Court and the company exited the process with 45 jobs intact and all historic creditors fully discharged through the scheme of arrangement.