The High Court has appointed a provisional liquidator to a company that supplies kit for the national football teams and has debts of some €13.3 million.
JACC Sports Distributors Ireland supplies jerseys and sportswear for the Football Association of Ireland (FAI), which are worn by the national teams. This represents the firm’s most valuable contract.
It also has a number of other club supply deals, including with Connacht Rugby, smaller League of Ireland clubs, and a valuable contract with the FAI’s exclusive retail partner, Elverys.
The FAI last Monday terminated its contract, which the court heard effectively meant JACC has to close.
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On Wednesday, JACC’s largest creditor, Deal Partners Logistics Ltd — owed nearly €7.3 million — petitioned for Mr Justice Brian O’Moore to appoint a provisional liquidator to the firm in circumstances where there was serious concern about the running of the company and its failure to meet debt repayments over the last few months.
The judge adjourned the matter to Thursday so that JACC could be notified of the petition and represented.
On Thursday, the judge said it came as “some surprise” that there was no appearance on behalf of JACC.
There was, however, an appearance by a solicitor for Ulster Bank — owed €3.8 million — which was not opposing the appointment of the provisional liquidator and for Revenue — owed €2.5 million — which was reserving its position on the application.
Mr Justice O’Moore was satisfied to appoint Aengus Burns of Grant Thornton as provisional liquidator. The application to confirm the liquidator was adjourned for a week.
He was satisfied the directors of the JACC had been properly served and that the application to appoint the provisional liquidator had been effectively communicated to the company.
Contract termination
The two shareholders and directors of JACC are Jonathan Courtenay, of Whites Road, Castleknock, Dublin, who owns 95 per cent of the shares, and Patrick Peyton, of Diswellstown Manor, also Castleknock, who owns 5 per cent.
The company had “chosen not to appear” and the concerns the judge said he had raised on Wednesday about the conduct of the business, which could have been explained if there was an appearance, now “take on a great significance”, he said.
They included the involvement of the two shareholder directors in two other dormant companies which are in the same business.
It was undoubted that the appointment of a provisional liquidator will be adverse to the company but the judge said that in his decision a balance has to be struck.
There was also no doubt the company was aware of its financial situation as evidenced by an email from its financial adviser last September which stated the business was not viable based on debts of between €13 million and €14 million, he said.
The email also said options considered were liquidation, a new investor, or examinership. However, an examinership would trigger the termination of the FAI contract which would effectively mean the closure of the business. The court heard talks with an investor had not been successful.
The judge said he was also concerned that the company drew down some €1 million worth of stock last year, over which Deal Partners said it had title, without accounting to Deal Partners as was required under trade and buyback arrangements.
There was a further incident last Monday when JACC applied to remove stock without informing Deal Partners of the termination of the FAI contract, he said.
The court heard the company’s main asset is €9 million worth of stock which the petitioner says a provisional liquidator would get control over so that may be some prospect of recovering residual value from other contracts to which the company is a party.
Having considered the evidence before him and in particular where the balance of justice lay, he was satisfied to appoint Mr Burns as provisional liquidator and also granted him most of the powers over the affairs of the company sought by the petitioner.
While he was adjourning the hearing of the appointment of a permanent liquidator to next week, he said there was no guarantee it will proceed because the company may resist the appointment and there may be a dispute about the petitioner’s allegations.
