Interim examiner appointed to family bakery

An interim examiner has been appointed by the High Court to a west of Ireland family bakery business employing 82 people on the basis of an independent accountant’s view that it has a reasonable prospect of survival with expected investment of €1m.

Brogan’s Bakery Ltd, Glenamaddy, Co Galway, supplies confectionery such as muffins and cupcakes to supermarket giants in Ireland and the UK, including Dunnes Stores, Tesco, and Asda, the court heard.

Michael Brogan, a 40% shareholder in Brogan’s, petitioned today for court protection for the family food business dating back to 1967.

The application came just hours before he had scheduled meetings with other directors and shareholders who, he claimed, were failing to face up to the reality of the company’s troubled financial position.

Mr Justice Peter Kelly was also told that Sean Brogan, acting chief executive of Aer Arann and a brother of Michael Brogan, is prepared to invest about €1m into the business under a suitable scheme of arrangement.

Sean Brogan has a 5% shareholding in the company and has been identified as the “white knight” for a survival scheme, counsel for Michael Brogan, Rossa Fanning, said.

The company was historically profitable but a burden was created on it after a 2005 investment of €8.2m in a new facility, Mr Fanning said.

Michael Brogan, who had guaranteed loans for the company, believed other directors were not facing up to its difficulties and would seek support for examinership from other directors and shareholders at meetings later today, he added.

Granting the application for court protection and an interim examiner, the judge noted Brogan’s Bakery business was set up in 1967 by Liam and Patricia Brogan and the company was formed in 1973.

It produced bread and confectionery and built a modern plant in 2005 for €8.2m, he said. While no longer producing bread, it still supplies confectionery, including muffins and cupcakes.

While it was unusual for a single director or shareholder to present a petition for protection, Mr Brogan was entitled to do so as he held a 40% shareholding, the judge said. It was also clear there had been “disunity” between directors of the company over a long period.

The company was insolvent on the evidence, and Mr Brogan contended his fellow directors are not addressing this, the judge added.

While the company showed, on a book value, a surplus of €368,000, there was a €2.8m shortfall as a going concern and there was a case for court protection.

Mr Justice Kelly said his practice was to only appoint interim examiners in exceptional circumstances but this was one of those cases.

He would appoint Michael McAteer interim examiner in circumstances including that there was disunity at board level, the news of court protection was likely to come as a “bombshell” to the other directors, and the interim examiner could bring “a degree of calm”.

He was also conscious that Sean Brogan has indicated he is willing to invest €1m and the sooner talks got underway about that, the better, the judge said.

An interim examiner might also assist in ensuring the company had continuing supplies and assure employees as the company was the biggest employer in the Glenamaddy area. The petition will come before the court again on Nov 14.