Chartbusters survival scheme approved

A SCHEME aimed at ensuring the survival of 28 Chartbusters home entertainment stores employing 172 people has been approved at the Commercial Court.

The scheme provides for new investment and a wholly new management structure with group founder Richard Murphy exiting it by the end of this year.

While noting the scheme allows the group to “walk away” from pre-examinerhsip debts amounting to some €15 million in the event of a winding up, Mr Justice Peter Kelly said it at least meant creditors would get more than if the company was put into liquidation.

The scheme provides creditors will receive, at most, 10% of their dividend while many will receive between just 2.5% and 5%. Various creditors represented in court expressed support for, or were neutral towards, the scheme with some seeking minor modifications which were also approved.

The scheme also provides for new investment of some €700,000 and for a new management structure at Chartbusters with its founder Richard Murphy exiting the group by December 31 and ceasing to have any shareholding.

The majority shareholding, 51%, will be held by John McCabe, and the remaining 49% will be held by Catherine Kenny and Anthea Jordan.

In outlining the scheme, Rossa Fanning, for examiner Neil Hughes, said the examiner had been sensitive to concerns expressed about the management of the company and had told creditors he would be recommending Mr Murphy should no longer be involved to provide “a fresh start”.

However, the examiner had since modified his position as Mr Murphy had a role in introducing investors to the company and the investors wanted Mr Murphy to remain on for a while to ensure continuity.

Mr Fanning also said concerns in relation to banking facilities had been resolved and Bank of Scotland Ireland was to continue banking the group following the lifting of court protection.

Confirming the scheme, Mr Justice Kelly said he was satisfied the criteria for approval had been met and there was a reasonable prospect of survival of the companies.

Given the approval of the scheme, the judge made an order lifting the examinerhsip from noon today.