The High Court has appointed an interim examiner to the company that operates the Iceland chain of retail stores in Ireland.
The court heard that Metron Stores Limited is insolvent and unable to pay estimated debts of €36 million as they fall due.
It got into difficulties due to factors including a recent Food Safety Authority of Ireland (FSAI) order requiring it to withdraw all imported frozen food of animal origin from its stores, the court heard.
However, an independent expert report states that the company has a reasonable prospect of survival if certain steps, including the appointment of an examiner, are taken.
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Mr Justice Michael Quinn on Tuesday appointed insolvency expert Joseph Walsh as interim examiner to Metron Stores, which operates 26 Iceland outlets in the State and employs more than 344 people.
Petitioning the court for Mr Walsh’s appointment, barrister Ross Gorman, for the company, said it decided to seek the protection of the courts due to issues including last week’s decision by the FSAI to serve a notice on it.
That notice required the company to withdraw and recall all imported frozen foods of animal origin from all of its stores brought into Ireland since March 3rd.
Counsel said the FSAI’s move was a precautionary step caused by several alleged breaches of food legislation.
The company has “fully complied with the terms of the FSAI notice”, counsel said, adding his client has identified 239 products out of a full range of 3,000 items that may be in breach of EU regulations.
The reason for the alleged breaches was the importation of the products from the UK into Ireland. The only veterinary certificate for the items are from the UK, counsel said.
The items need veterinary certification from within the EU to comply with EU regulations.
Had the items been imported from Northern Ireland, the issue would not have arisen, counsel said.
Counsel said the company has taken steps to address the issue and to obtain the appropriate certification.
As part of its efforts, the company has engaged with the FSAI and has identified a new Irish-based supplier of frozen foods, counsel said.
The company believes more than 25 legal actions against it, including personal injuries claims and litigations threatened and brought by some of its landlords will result in it potentially sustaining significant liabilities.
The company has suffered significant losses in the past two years due to a high-cost base. There are other problems such as employment issues, including a strike at one of its stores. Counsel said these issues have been mainly resolved.
Counsel also said the independent report, prepared by insolvency expert Cormac Mohan, stated that the company can continue to survive if a scheme of arrangement can be agreed between the company’s creditors and if fresh investment can be secured through the examinership process.
In addition, the company would also need leases of loss-making stores repudiated or renegotiated.
Counsel said the company’s main debtor is its owner and sole shareholder Project Point Technologies Limited, which is owed €34 million.
It also owes 44 trade creditors €1.7 million, as well as more than €230,000 in rates.
It acquired, and then entered into a franchise agreement regarding Iceland’s Irish stores from the UK company Iceland Foods Limited, earlier this year.
Counsel said that since the purchase, the new owners have been taking steps to address losses sustained in recent years and restructure the business.
It has implemented and identified €6 million in savings but is still loss-making, counsel said.
Counsel said the appointment of an examiner would be in the best interests of all the relevant parties and would give the company the best opportunity of surviving.
The company is also confident it can obtain the fresh investment it requires.
The matter will return before the courts in two weeks’ time.
