The fate of 267 jobs at Chartbusters home entertainment stores hangs in the balance pending a High Court decision next week.
Mr Justice Peter Kelly reserved his decision on continuing court protection for the company, which operates 37 stores here and has debts of some €20m. Court protection will continue pending his ruling.
The judge was told that an independent accountant believed the company had a reasonable prospect of survival provided certain conditions were met, including the closure of some of its stores with the consequent loss of jobs, and procuring further investment.
Two of the group's creditors, Lombard Ireland Bank and Winchurch Investments Ltd, opposed the examinership, arguing the group's core DVD business is 'dead' and also voicing concerns about aspects of the group's management and the adequacy of the financial information put before the court concerning the group.
Gabriel Gavigan, for Lombard, said his client has no faith in the management of the company and it had not been given proper books and accounts.
Caroline Costello, for Winchurch, said her client initiated winding-up proceedings for the group last October but did not proceed then because of representations about monies due to Winchurch made by Richard Murphy of Chartbusters. Winchurch's winding up application will be dealt with by the court next Tuesday after the judge outlines his decision on the examinership application.
The opposing creditors also complained about the group's diversification into property acquisition and operating tanning booths. Other creditors, including the Revenue, adopted a neutral position on the examinership application.
Addressing the arguments of the opposing creditors, Gary McCarthy, for the company and related firms, said Lombard Ireland had provided finance for the acquisition of the tanning booths which it was now curiously complaining about and that business had generated profits of some €4m.
It was inappropriate for Lombard to claim the group's core DVD business was dead when no evidence was advanced to back up such claims, he added. He also rejected the claims about the adequacy of the financial information provided.
Counsel argued Chartbusters should not be criticised for seeking to acquire freehold rather than leasehold interests of its properties. He said Mr Murphy had believed holding leasehold rather than freehold interest was holding back the group.
Such decisions were made during the property boom by not just Mr Murphy but many others and it was easy to criticise them in hindsight, he said.
Neil Hughes, interim examiner to the company, has in an interim report not dissented from the opinion of the independent accountant that the company has a reasonable prospect of survival once certain conditions are met. Mr Hughes' interim report also shares the independent accountant's view that some of the Chartbusters stores will have to be closed.
Bank of Scotland (Ireland), KBC Bank, Lombard Ireland and Friends First Finance Ltd are owed €12m by Chartbusters while landlords are owed €2m.
Mr Hughes, of Hughes Blake Chartered Accountants, was appointed interim examiner earlier this month. Richard Murphy said Chartbusters was incorporated in 1993 and, by 2002, the group had 50 stores grossing a profit of €11m. Two years later profits had risen to €17.5m.
As a result of competition and changes in technology generally, the company diversified into internet services and tanning booths. Group turnover dropped to €12.2m for the period to April 30 2008, and costs, in particular rent, had eroded profits. He hoped 20 stores currently operating profitably will be retained.
