Chartbusters gets court protection

A JUDGE has granted court protection to Chartbusters entertainment stores as reports indicate it has a reasonable chance of survival if certain conditions are met.

While agreeing in the High Court yesterday to appoint an examiner, Mr Justice Peter Kelly accused the company’s founder, Richard Murphy, of “sharp practice” and “sleveenism” in his treatment of a major creditor who had sought to wind up Chartbusters.

Because of Mr Murphy’s conduct in staving off the winding up petition by Winchurch Investments Ltd through giving a post-dated cheque which was later stopped, Mr Justice Kelly said he was making Mr Murphy personally liable for the legal costs, estimated at €20,000, of that petition.

Winchurch had agreed last October to adjourn its winding up petition on the basis of the cheque. Chartbusters subsequently petitioned for court protection.

While such conduct was not enough to deny the hearing of the petition for examinership, the judge said it was “a form of sharp practice or sleveenism of which the courts disapprove”.

“It has to be brought home to company directors they have obligations,” he said. If a company director was going “to play ducks and drakes” with the court, they would not be looked on sympathetically.

The application for examinership was opposed by two creditors, Winchurch and Lombard Ireland, who are owed €1.8 million between them. Other creditors owed €18m, including Revenue, adopted a neutral position.

The judge said the firm is insolvent and would have a shortfall between assets and liabilities of some €246,000 as a going concern and of €4.8m if wound up.

Chartbusters employs 267 people. It told the court it had diversified into internet services and tanning booths. Mr Murphy hopes 20 stores currently operating profitably will be retained, with 17 to be closed.