The Vita Cortex plant in Cork – is NAMA being unfairly portrayed as Scrooge

As we count down the days to Christmas, we probably become more sensitive than usual to the plight of our fellow man. And so the story coming out from Cork of workers not only facing redundancy at this of all times of year, but that they may not even receive their redundancy entitlements, strikes a particular chord. NAMA is being portrayed as a Scrooge character and the case has now attracted the attention of politicians and unions.

Vita Cortex is a company based on Kinsale Road, Cork city which manufactures foam products for a range of industries including bedding and furniture, packaging and aircraft. History of the company and product range is here . In September 2011 it announced it intending to shut Vita Cortex down on 16^th December, 2011 – about 33 employees are to lose their jobs. Which is sad enough, but Vita Cortex apparently doesn’t have the funds to pay the €1.25m redundancy bill which compounds the tragedy.

So where does NAMA come into this? NAMA is understood to have a charge over the building from which Vita Cortex operates but is otherwise unconnected with Vita Cortex and NAMA had no involvement in the redundancy decision. The Vita Cortex building is associated with developer Jack Ronan, said to be the cousin of Treasury’s Johnny. What NAMA does have, is a lien over cash deposits held by a separate company controlled by Jack Ronan, and it is claimed those deposits come to a total of €2m.

So the SIPTU union and local politician Ciaran Lynch have gotten involved. As they see it, it is NAMA which is holding onto cash in one Jack Ronan company which could be used to pay for the workers’ redundancy in another. For its part, it is understood NAMA regards the cash in a separate company as being unrelated to the needs of Vita Cortex, and that these funds should be used to further NAMA’s objectives of returning as much cash as possible to the Nation.

A tragic situation for the workers, but it seems understandable why NAMA is keeping out of it.

UPDATE: 15th December 2011. Quite rightly the Vita Cortex story has become national news – redundancy the week before Christmas is particularly harsh.  RTE covered the story this evening here. However the claim by RTE that the 32 workers (reported as 33 and 40 elsewhere) will not get a cent tomorrow is misleading in the sense that the workers should be entitled to statutory redundancy payments (2 weeks per year of service plus one week) which should be paid by the Social Insurance Fund administered by Joan Burton’s Department of Social Protection. The RTE news report showed the heartbreaking scene of one employee with 47 years service – that is, he will have worked at Vita Cortex since leaving school – describing his feelings with a dignity you don’t often see these days. According to the latest rates, he should be entitled to €57,000 if his pay is more than €600 per week. Hopefully the Department of Social Protection will do its work quickly and efficiently and ensure the workers receive their statutory allowance as soon as possible.

UPDATE: 17th December, 2011. Although the workers (put at 32 in some reports, 33 in others and 35 in the Irish Examiner) were indeed made redundant yesterday and reportedly received one week’s additional pay, they have not received anything else at this stage and are presumably now making claims on the Social Insurance Fund for their statutory redundancy (two weeks per year of service plus one week multiplied by their weekly wage subject to a weekly wage maximum of €600). The workers have reportedly staged a sit-in at the plant and Fianna Fail leader and Cork TD, Micheal Martin has visited the workers. Representatives of the workers were reported to have met NAMA on Thursday but as regards the €2.5m in a deposit account, it remains the case that this is in a separate company and the only commonality between the companies appears to be Jack Ronan, so lawfully it seems this money is beyond being used to pay redundancy. The Irish Examiner reports that the Vita Cortex workers have 900 years of service between them which would imply a statutory redundancy bill of €1,100,000 (900*2*600 + 32*1*600).  The claim by the workers for redundancy on the company is said to be €1,250,000 so this dispute seems to be about the timing of the payments – the workers might be waiting six months for the Department of Social Protection to pay them from the Social Insurance fund – and €150,000 (the difference between the statutory redundancy and the actual redundancy claim).

UPDATE: 20th December, 2011. It’s Day 5 of the sit-in (pictured here) at the Vita Cortex facility on Kinsale Road in Cork city  as workers laid off last Friday say they will continue to occupy the facility until they receive redundancy pay. At least three politicians have now gotten involved, Ciaran Lynch first followed by Micheal Martin and Jerry Buttimer. It is reported that Jerry Buttimer spoke with NAMA yesterday and that NAMA’s CEO Brendan McDonagh reiterated the Agency’s position: that the famous €2.5m belongs to another company related to Jack Ronan and is securing loans which NAMA has now taken over and that NAMA had no hand in the decision to close the Vita Cortex facility. It is reported that the Managing Director of Vita Cortex is today meeting with NAMA. Vita Cortex’s financial status is unclear – it is reported in today’s Irish Times , quoting TD Ciaran Lynch, that machinery is being transferred from the Cork facility to “another factory in Athlone” . Separately Ciaran Lynch issued a statement on Thursday last demanding an investigation by NAMA  into Vita Cortex’s finances.

UPDATE: 26th December, 2011. The sit-in by the 32 continues with shifts of 12 former workers normally maintaining a presence at the facility at any one time. SIPTU has been active in this matter, with local representative Anne Egar involved at an early stage and on Saturday, the SIPTU president Jack O’Connor warned that SIPTU workers at other locations across the State would be mobilised in the New Year if the workers remained without compensation payment.  Possibly of more significance it was reported that the workers were offered €1,500 each as a downpayment on any eventual redundancy settlement from the Social Insurance Fund, with a condition that they allow certain plant and machinery to be removed from the plant. The €50,000 offer (32 workers * €1,500) was rejected. The offer was reportedly made by Vita Cortex and the financial condition of that company remained unclear, and clarifying that financial condition would seem the most constructive way forward – if the company doesn’t have the financial wherewithal to pay the redundancy – and the source of the €50,000 above needs to be clarified as does NAMA’s involvement which seems confined to another company under Jack Ronan’s control that has property related loans – then all effort should be made to expedite payments from the Social Insurance Fund. While the workers are sitting-in in Cork, they are not available for work or able to start other jobs which ultimately doesn’t seem very constructive if there is in fact no money available at this point. The workers have set up a Facebook page here. Lastly there was a Christmas mass said on the site, which the Irish Examiner recorded, part of which is available here.

UPDATE: 21st January, 2012. It is being reported that NAMA is having discussions with Jack Ronan to see if NAMA might release cash to fund the redundancies in return for Jack Ronan pledging an asset of equal value to the cash with NAMA. The net cash needed from NAMA is about €500,000 as Vita Cortex can get a 60% refund on redundancy payments. So the question involving NAMA is whether Jack Ronan can produce an unencumbered asset worth €500,000.

UPDATE: 23rd January, 2012. Not that it will help the Vita Cortex workers, but the head of the Labour Relations Commission which last week oversaw unsuccessful talks between workers and Vita Cortex management has exonerated NAMA from fault in matter. According to the Irish Examiner  Kieran Mulvey of the LRC said “it is not for NAMA to give the nod, it is for the beneficial owner of Vita Cortex. NAMA have to be careful that they also, in their circumstances, are not diluting assets to the benefit of someone who is in NAMA and who probably, privately, has the capacity to pay” So it seems the ball is now in Jack Ronan’s court, or if he fails to personally step up to the plate, it seems the workers will have to wait 6-12 months for statutory redundancy which has apparently been applied for by the company.

UPDATE: 2nd February, 2012. It is reported that the workers at Vita Cortex are expected to receive their statutory redundancy payments from the Department of Social Protection’s Social Insurance Fund in what seems like a record of just two months. The sit-in and protest is set to continue as the workers continue to demand the additional 0.9 weeks per year of service that it is claimed was promised to the workers and which was paid in the case of previous redundancies at Vita Cortex. There was also a protest this week outside the homes of Jack Ronan at  Orchardstown Stud farm at Lisronagh, outside Clonmel in Co Tipperary, and of former chairman, Sean McHenry, in Douglas, Cork.

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