Court to approve rescue plan for pharmacy group

The High Court will approve a rescue plan for a group of companies that operate a number of pharmacies and employs 46 people in Galway if certain modifications are made.

Today at the High Court Mr Justice Frank Clarke said that he was happy to approve that plan would allow Michael McLoughlin Pharmacy Ltd and Sundrive Pharmacy Ltd to continue to trade on the condition that certain modifications are made.

The Judge said that the scheme must be modified to reflect the Revenue Commissions concerns over money that was taken out of the company by its directors on which tax is due. The group director's are Michael and Anne McLoughlin of Devon Park Salthill, Galway.

Revenue had opposed the plan, submitted to the High Court for approval by the examiner to the firm Mr George Maloney, on the grounds that its position would be prejudiced. Mr Maloney of Baker Tilly Ryan Glennon, who last October was appointed as examiner to the firms.

In his ruling yesterday the Judge said that he was adjourning the matter to later this month to allow for the modifications to be made to the scheme.

Both the examiner and United Drug (Wholesale Ltd), who will invest in the companies if the scheme is approved, have argued as all parties concerned including Revenue would do better if the scheme is approved rather than be placed into liquidation.

Under the terms of the proposed scheme United Drug, who are also creditors of the firms, United Drug will provide approximately €1.2m to pay off the firm's creditors.

United Drug will also effectively take over the businesses, and the old management will have no role in the companies.

Last October the two firms were granted the protection of the court from their creditors, on foot of an application by United Drug, after the High Court was informed they were insolvent and unable to pay their debts.

The companies got into difficulty due to the operation of director's loan accounts involving sums estimated at €3.12m, because of inadequate cost control and management, the impact of state expenditure cuts and the costs of opening a new pharmacy in 2008.

The group's main creditors include Bank of Scotand Plc. who are owed more than €7m, United Drug and the Revenue Commissioners.