Parent company of Cork retailer Compu B goes into examinership

Parent company of Cork retailer Compu B goes into examinership
Compu B store, Opera Lane, CorkPic; Larry Cummins,

A High Court judge has confirmed examinership for 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, including 110 in Ireland.

Mr Justice Denis McDonald last week appointed David O’Connor of BDO as interim examiner to the companies.

When the matter returned before him today, the judge was satisfied, on foot of evidence including reports indicating the companies have a reasonable prospect of survival if certain conditions are met, to appoint Mr O’Connor as examiner.

It was "encouraging" Mr O’Connor has already received an expression of interest from a potential investor, he said. He also noted the significant number of jobs at stake and the absence of objections to examinership.

Compu b, founded in Limerick in 1992, has six stores here: Grafton St, Dundrum Town Centre, the Pavilions, Swords, all in Dublin; and in Limerick, Cork, and Galway. It also has 24 stores in the UK.

The examinership concerns 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).

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 clients include Amazon and Ryanair.

CBL acquired the loss-making Stormfront group of 23 stores in late 2019 so as to acquire a more significant retail presence in the UK market and improve buying power. However, the Covid-19 pandemic delayed planned integration and a cost reduction programme with the result the Compu b group incurred significant ongoing losses through the Stormfront group between January and May 2020.

The companies' petition said the Compu b business has historically been profitable but a number of factors came together which have had significant negative impacts on the companies, including the pandemic, store closures resulting from that, underperforming stores, and acceleration of customer trends towards buying online.

Unless court protection is secured, the companies will be unable to pay their 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 reported his view the companies have a core business capable of survival on a going concern basis subject to implementation of a restructuring plan.

Declan Murphy, for the companies, said today that the evidence met the legal test for examinership.

Kelley Smith, for Mr O'Connor, provided a draft report from him that stated, based on the information available to him, he had no reason to disagree with the independent expert's view the companies have a reasonable prospect of survival as a going concern subject to satisfaction of the conditions outlined.

Mr O'Connor has met with the companies' key management, has had conversations with Apple personnel who indicated support for the key management team, and had an expression of interest from a potential investor, said Ms Smith.

Counsel for the Revenue Commissioners neither consented nor objected to examinership and noted all tax returns would be filed and all taxes paid as they fall due during the period of protection.

Mr Justice McDonald said he was satisfied last week from oral evidence of the group's chief financial officer, Alan Victory, that the companies' centre of main interests is Ireland and further evidence confirmed that.

He was satisfied on the "very extensive" evidence that the companies have a significant business which suffered an unexpected blow as a result of the pandemic but have a reasonable prospect of survival as a going concern subject to matters outlined by the independent expert being addressed.

The evidence all pointed in the one direction and met the test for examinership, he concluded.

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