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The Superior Court has appointed an interim examiner for the Cara pharmacy group, which employs more than 160 people.
The group’s directors are former RTÉ Dragons’ investor Den Ramona Nicholas and her husband Canice Nicholas.
They had opposed the application for the appointment of the interim examiner, submitted by Elm Corporate Credit DAC, the group’s largest creditor and lender.
On Friday, Elm’s Rossa Fanning SC said the Cara group had made losses 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, the attorney said.
Aillil O’Reilly BL, for Cara, asked the court to defer Elm’s request for the appointment of an interim examiner.
He said directors were very concerned about the impact it would have on employees and the communities they serve, as well as their own professional reputation.
Directors also called Elm’s negative description of the group’s financial system “exaggerated,” it said.
Judge Mark Heslin said he was pleased to appoint PWC insolvency practitioner Ken Tyrell as interim examiner for Cara Pharmacy Unlimited Company and a dozen related companies.
The court was not prepared to defer the request to appoint an interim examiner, he said.
Noting the objections raised by the company, the judge said his decision “in no way challenges” the reputation, skills and professionalism of the director.
He noted that an independent expert’s report that the group, which operates 13 pharmacies and provides prescriptions to nursing homes, has a reasonable prospect of survival if certain measures are taken.
These include restructuring the business, a new investment in the group, and court approval of a settlement plan drawn up by an examiner with the group’s creditors.
Appointing an examiner, Fanning said, is in the best interest of all stakeholders, including the 160 employees. Two parties are interested in investing in the group, the lawyer said.
The attorney said Elm was willing to provide sufficient funds during the examination period on terms that included such money being certified by the examiner.
In the event of dissolution of the group, there would be a deficit of 16.3 million euros.
The lawyer said the group owes Elm € 14 million, which is due at the end of the year. Other creditors include suppliers, landlords and local authorities, the lawyer said.
The lawyer said the group had a pre-tax loss of 4.6 million euros between 2016 and 2019.
Its losses were due in part to the challenging retail business environment, poor stock control and an unsustainable cost base.
The group had struggled to increase sales, and changes to the group’s main supplier, United Drug, in its payment terms had a negative effect.
There was a large gap between his budget and actual income, which, according to the lawyer, had undermined Elm’s confidence in the group’s management.
The Covid-19 pandemic had exacerbated things, the lawyer said.
Earlier this year the group defaulted on scheduled payments totaling € 360,000 to Elm, it added. Elm requested proposals from the group, but none have been received.
Elm was concerned about the lack of explanation on items that included a € 83,000 directors loan made when the group had cash flow problems, a € 100,000 payment to someone outside the group, and 37 check payments totaling 804,000. €.
The lawyer said that given the group’s financial situation, any objection to the appointment of an examiner was “unrealistic” and akin to King Canute “telling the sea to return.”
The judge adjourned the matter for two weeks and said any objections to the examination process will be heard at that time.
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