Brooks group gets court protection

An interim examiner has been appointed to the group operating the Brooks, Heat Merchants and Tubs and Tiles businesses.

Management restructuring proposals for the group include redundancies and branch closures, the High Court heard.

Mr Justice Brian McGovern yesterday granted an application by James Doherty, counsel for BHT Group Ltd, to appoint Kieran Wallace of KPMG as interim examiner to the companies, which have 59 shops. The group has debts of €31.8m, including €21.8m to unsecured trade creditors.

The directors of the group said they believe the companies have a viable future post-restructuring based on the fundamental strengths of their businesses. The companies had sales of €129m in 2011, with Heat Merchants accounting for €62m, Brooks €56m, and Tubs and Tiles €11m. The workforce of 445 is down from 1,300 in 2007.

A difficult trading environment in the construction and home improvement sectors during 2011 and at the start of this year had led to the application for court protection, they said.

Rumours about the group also led in recent days to suppliers seeking recovery of stock from company premises and concerned customers seeking to recover deposits.

An independent accountant’s report by William G O’Riordan of PricewaterhouseCoopers expressed the view the companies have a reasonable prospect of survival in whole or in part, provided certain conditions are met, including procuring investment, retaining key customers during examinership and continued provision of sufficient working capital facilities from Burdale Financial Group.

An Irish venture capital fund has indicated an interest in investing in the business provided a suitable restructuring scheme could be effected during examinership, the directors said. Other expressions of interest in some or all of the parts of the business had also been received.

Management also believe there is further scope to reduce costs and restructure the businesses.

BHT Group Ltd, with registered offices at Athlone, Co Westmeath, comprises Brooks, the oldest established builders merchant in Ireland dating back to 1789, Heat Merchants, and Tubs and Tiles businesses supplying the construction, home improvement and DIY sectors. Its directors are James Weight, Burghley Road, London and Roland Houchin, Braintree, Essex.

The petition stated the group incurred a loss in 2009 of €85.2m, after which it implemented cost-cutting measures. In 2010, it incurred a loss of €6.1m and last year, a loss of €400,000.

The budget announcement in December led to further contraction in consumer spending and confidence and to group sales and gross margins being considerably behind target that month, it said. That trend continued into this year with January sales the worst since Jan 2009.

The group’s largest single supplier is O’Donovan Enterprises Ltd, owed €2m with €400,000 of that due for payment yesterday, the petition said.

Cost-saving measures were maintained after the group was acquired by WIBHM Ltd in Jan 2010 but the companies were not now able to pay their debts as they fall due, the petition said.

WIBHM has been dissolved and the direct shareholder of the companies is BHT2 Ltd, with the ultimate shareholder and parent company of BHT Group being Watali Ltd, a Cyprus-incorporated company.

The petition said Brooks losses in the second six months of last year were reduced to €500,000.