The High Court has approved a survival scheme which will see up to 30 jobs saved at Vernon Stores Ltd, a long-established Dublin-based food supplier to the restaurant and catering industries.
Mr Justice Denis McDonald said this examinership commenced just before the Covid-19 crisis and it was “heartening to see”, in a crisis of this kind, that a company engaged in the supply of food, with many restaurant customers, can be saved with a workforce of up to 30 employees.
He made the remarks when approving the survival scheme for Vernon Stores Ltd, with registered offices at Upper Sheriff Street, Dublin.
It had started as a greengrocers in Clontarf, Dublin, in the late 1950s, but was not incorporated until 1980, since when it has evolved into one of Dublin’s leading suppliers to the restaurant and catering industries.
The company is owned by Ronan Sullivan via his being the owner of the entire issued share capital of Vernon Food Services Ltd.
Mr Sullivan, of Belmont Gardens, Donnybrook, Dublin 4, is the third generation of his family to have operated the business.
Last February the company, then with 66 employees, petitioned the High Court for protection and an examiner, Joseph Walsh of JW Accountants, was appointed to prepare a survival scheme.
Historically profitable
The court heard the company was historically profitable up to 2017 but made losses of €1.2 million in 2018 and €439,000 in 2019. It made various changes during 2019 to address the losses and said those changes were not fully seen in the bottom line achieved that year.
The court heard, as a result of several issues, the company was suffering significant cashflow pressures and, when the petition was presented, it owed some €2.96 million to trade creditors and was cashflow insolvent.
It owed some €220,000 to Revenue for PAYE/PRSI between October 2019 and January 31st, 2020.
The court was told an independent expert believed the company had good prospects for survival once various conditions were met, including securing court protection, investment and approval of a survival scheme.
On Thursday, Gary McCarthy SC, instructed by solicitor Graham Kenny, for the company, applied for approval of a modified survival scheme which noted a number of employees had been laid off during the protection period.
The scheme provides for the substantial writing-down of much of the company’s debts and for an investment in it by another catering firm, Thurles Cash & Carry Ltd.
Unsecured creditors
Mr McCarthy said unsecured creditors, who account for the bulk of the debt, will significantly bear the writing-down of the debt. They will get 3.33 per cent of their debts as will the company’s landlord.
Preferential creditors will get 17.23 per cent. Mr Justice McDonald said he was satisfied all the statutory criteria had been met for approval of the scheme.
He was also satisfied the court should exercise its discretion in favour of approval in circumstances where the creditors would be better off than in a winding-up, and the scheme would see retention of the business and the jobs of many employees. He fixed 4pm on June 8th as the effective date for the company’s exit from court protection.
