Skelligs Chocolates 'has reasonable chance of survival' as progress made in attracting investors, court told

Examiner said positive and promising talks were continuing with six outside potential investors, and with one connected possible investor

Patrick McKillen Jnr had asked the court in March to protect his Ring of Kerry chocolate company, Seacláidí Na Sceilge Teoranta, from its creditors through the appointment of an examiner.

Significant progress has been made in attracting investors to help save Seacláidí Na Sceilge, which trades as Skelligs Chocolate and which is currently under the protection of the courts, examiner Joseph Walsh told Judge John O’Connor in the Circuit Civil Court on Monday.

Mr Walsh, who is legally advised by Graham Kenny Solicitors, was granted an extension of time in his examinership of the company’s affairs to permit him advance negotiations with all parties concerned.

Updating the court on his progress since having been appointed examiner to the company last month, Mr Walsh, managing director of JW Accountants, told Judge O’Connor while it had not yet been possible to formulate proposals for a scheme of arrangement, significant progress had been made in the investment process and an extension of time would enable him to finalise his proposals.

“Based on my examination of the affairs of the company, I believe it has a reasonable prospect of survival, and I can report that most suppliers have continued to trade with the company,” he told Judge O’Connor.

He said positive and promising talks were continuing with six outside potential investors, and with one connected possible investor.

Patrick McKillen Jr had asked the court in March to protect his Ring of Kerry chocolate company, Seacláidí Na Sceilge Teoranta, from its creditors through the appointment of an examiner.

Barrister Ross Gorman had earlier told Judge O’Connor the property developer, son of wealthy businessman Paddy McKillen, was bidding to save the company from its creditors.

Mr McKillen Jnr, of The Birches, Torquay Road, Foxrock, Dublin 18, had asked Judge O’Connor to appoint chartered accountant Joseph Walsh, who had agreed to act as examiner. 

Mr Gorman, who appeared with Kane Tuohy Solicitors for the company, which is currently unable to pay its debts, told Mr O’Connor an independent expert, Cormac Mohan, of Fitzwilliam Corporate, was of the opinion Skelligs Chocolate had a reasonable prospect of survival and could be saved if an examiner was appointed.

He said Skelligs Chocolate, which trades from The Glen, Ballinskelligs, Co Kerry, employed 24 permanent and part-time staff, whose jobs could be saved.

Judge O’Connor heard the Ring of Kerry tourist attraction normally opened from Easter to late October, although the company operated a year-round service for its customers, which included artisan food shops, delicatessens, grocery and bookstores, off-licences and gift shops, together with blue-chip customers such as Arnotts, Avoca, Brown Thomas and Dublin Airport.

The company, which was incorporated in October 1998, had been bought by Mr McKillen’s company Keillan Limited from former owner Colm Healy in March 2022 for €2m.

Company insolvent

Mr Gorman said the company was insolvent and the appointment of Mr Walsh was desirable in the expectation he could prepare an acceptable scheme of arrangement with Seacláidí Na Sceilge Teoranta’s creditors.

The court heard €485,000 was owed to the landlord company which was a connected party to Seacláidí Na Sceilge. The company paid an annual rent of €388,000, but the landlord had agreed to reduce the rent to €108,000 on a temporary basis. 

When a petition to wind up the company had been presented, a number of local politicians had publicly stated the company’s business was very important to the area and to South Kerry.

In a company outline to the court, it had been stated the big three main corporates in the confectionery market were Cadbury, Nestle and Mars. In a highly competitive market, the company had been forced to increase its prices on core products of between 25% and 30%, which, with other key raw materials and distribution costs, the increase in chocolate costs had an adverse impact on company gross margins.

The court will be told Mr McKillen Jnr, as the sole director, had indicated a willingness to invest funds in the company to assist sustainable growth through a forward-looking sales strategy supported by enhanced operational efficiency.