Creditors oppose court protection for debt-ridden Chartbusters

TWO creditors of Chartbusters, which operates 37 home entertainment stores and has debts of€20 million, are opposing the continuation of court protection for the company, the Commercial Court heard yesterday.

Mr Justice Peter Kelly was told Lombard Ireland and Woodchurch Investments are opposed to having an examiner confirmed for the company and had filed affidavits yesterday outlining their reasons. Other creditors, including the Revenue and ACC Bank, adopted a neutral position.

Bank of Scotland (Ireland), KBC Bank, Lombard Ireland and Friends First Finance are owed €12m by Chartbusters, while landlords are owed €2m.

Gary McCarthy, for the company and six related firms, including tanning and weight-loss outlets, said he needed time to reply to the affidavits and the case was adjourned until Thursday.

Rossa Fanning, for Neil Hughes, interim examiner to the company, said an interim report from Mr Hughes did not dissent from the opinion of an independent accountant that the company has a reasonable prospect of survival once certain conditions are met.

Mr Fanning agreed the interim report also shares the independent accountant’s view that some of the Chartbusters stores will have to be closed.

Chartbusters has 19 stores in Dublin and 18 throughout the rest of the state. The company made profits of €17.5m in 2004 and diversified into internet services and tanning booths.

Group turnover had dropped to €12.2m for the period to April 30, 2008, and costs — in particular rent — had eroded profits.

Chartbusters director Richard Murphy said the company was unable to repay the interest due on the loans and was servicing about €900,000 a year in leasing payments.

A break-out into the property market also proved unsuccessful due to the economic downturn.

Mr Murphy said the projection for the future was the retention of about 20 stores operating profitably.

He said an independent accountant believed the company and related firms would have a reasonable prospect of survival as a going concern with new investment, closure of underperforming stores, negotiations with landlords and acceptance of an appropriate scheme of arrangement by the creditors under the protection of the High Court.