An interim examiner has been appointed by the High Court to the Irish-headquartered parent of Compu b, a reseller of Apple premium computer products, and three related companies in the UK employing a total 395 people, of whom 110 are in Ireland.
Compu b, founded in Limerick in 1992, has six stores here – at Grafton St, Dublin; Dundrum Town Centre; the Pavilions, Swords; Limerick, Cork, and Galway – and 24 stores in the UK.
The petition for court protection and an interim examiner was sought in relation to Compu b Retail Ltd, with registered offices at Ballymount, Dublin, and three UK based companies, Compu b Ltd, Stormfront Retail Limited and Stormfront Technology Ltd. Compu b Ltd (CBL) acquired the two Stormfront companies in late 2019 and owns Compu b Retail Ltd (CBRL).
On the application of Declan Murphy, counsel for the companies, Mr Justice Denis McDonald said on Friday he was satisfied there was sufficient evidence to appoint David O’Connor of BDO as interim examiner.
That evidence included a report from an independent expert expressing the view the companies had a reasonable prospect of survival as a going concern provided certain conditions are met. arrangement. He was also mindful the application concerned a significant trading entity with 395 employees, the judge said.
In the petition, it was stated CBRL was incorporated to trade the group’s Irish activities through a separate entity mainly to protect against concerns arising from Brexit and foreign exchange rate volatility. It undertakes similar activities to CBL and its corporate client’s include Amazon, Ryanair, KPMG, AIB, Bank of Ireland, Munster Rugby, and Eventbrite.
The petition said CBL had acquired the loss-making Stormfront group of 23 stores in late 2019 with a view to acquiring a more significant retail presence in the UK market and improve buying power. It said the Covid-19 pandemic has delayed planned integration synergies and a cost reduction programme with the result the Compu B group has incurred significant ongoing losses through the Stormfront group in the period from January to May 2020. The Stormfront group was acquired for £2.4m (€2.66m), comprising a £1m upfront payment and a deferred £1.4m payment with a contracted contingent liability of a further £600,000, depending on future profitability derived from rebates from Apple under a recent contract called the Nd-8 contract. Those targets are now not likely to be reached due to the downturn resulting from Covid-19 and market contraction, it was stated.
The petition said the Compu b business has historically been profitable but a number of factors had come together which have had significant negative impacts on the companies and their cash flows including the Covid-19 pandemic, store closures resulting from that, underperforming stores and the acceleration of customer trends towards buying online.
Unless court protection is secured, the companies will be unable to pay its debts as they fall due from July 2020 with a deficit of €3.3m by the end of July 2020, it was stated.
An independent expert had provided a report expressing the view the companies could survive as a going concern on the basis they have a core business capable of operating on a going concern basis subject to implementation of a restructuring plan.
The judge made directions for advertising the petition and returned the matter to next week.
Earlier, having heard evidence from Andrew Victory, group financial director of the companies, the judge said he was satisfied the UK companies have their centre of main interests in Ireland. There was a clear commercial rationale for the change in centre of main interests from the UK to here, he said.