In March 2012, it was reported on here that a NAMA developer, Holtglen won a case at the High Court against Dunnes Stores. Little was made of the case on here at the time, because Dunnes was merely ordered to fulfill its contract to pay €20.3m for its site in the the Ferrybank Shopping Centre in Kilkenny and the assumption here was the sum would be paid, Dunnes would occupy the site and trade as normal – it didn’t seem like a life-or-death position for the Irish retailing giant. But fast forward eight months, and the NAMA developer Holtglen, backed by NAMA, is seeking the winding up of Dunnes Stores for non-payment of the €20.3m judgment. Not only that, but RTE is reporting that a Dunnes “executive”, Margaret Heffernan has written to the NAMA chairman, Frank Daly and RTE today reports “in one letter, Ms Heffernan told Mr Daly it did not make sense for NAMA to seek the winding up of Dunnes Stores.” This looks suspiciously like lobbying to me, and if that is the case and if the contact doesn’t find exemption under NAMA’s rules, then NAMA is obliged to report the contact to An Garda Siochana.
Holtglen Limited, controlled by the McPhillips family from Kilkenny is itself insolvent and its loans relating to the Ferrybank Shopping Centre – pictured here – have been transferred to NAMA. In Dublin’s High Court today before Mr Justice Peter Kelly, Holtglen sought the winding up of Dunnes Stores and the case is set to be heard on 14th December 2012.
For its part, Dunnes claimed in court today that it was “robustly solvent” but according to RTE, “had not paid the debt amid concerns about the Ferrybank Shopping Centre in terms of its viability and planning issues” Given the judgment by Mr Justice Peter Kelly in March 2012, you might have doubts about this defence, and it seems that Judge Kelly today expressed the same doubts.
So how is Dunnes doing financially? It’s a private unlimited company, seemingly, and doesn’t publish accounts, though there seem to be separate limited companies for stores, and accounts are available for these. It employs 18,000 according to RTE today, 16,000 according to the Dunnes Stores website and 2,500 according to other sources. It has 116 stores in the (Republic of) Ireland, 23 stores in Northern Ireland, six in England, five in Scotland and five in Spain. The Belfast Telegraph reported in April 2011 that the company’s turnover was GBP 194.7m (€240m) and its pre-tax profit was GBP 28m (€35m) though other sources suggest the overall annual turnover is €3.8bn. The company focuses on the sale of food, clothing and furnishings and faces competition from all angles with M&S at the higher end, Tesco/Musgrave/Superquinn/Supervalu in the middle and Aldi/Lidl at the lower end. A history of the company is available here. You would not have thought that a €20.3m bill would have caused it any real issues and that is why the judgment reported on here in March 2012 didn’t receive more attention.
Frank Dunne (69) is the managing director and Margaret Heffernan (70) is variously reported in the media as its “second biggest shareholder”, “chief” and an “executive” and “director of textiles”. She is listed as one of two directors of the private unlimited company, Dunnes Stores, alongside Francis Dunne (Frank Dunne, 69). NAMA’s anti-lobbying rules are available here. According to NAMA, “it is an offence to attempt to lobby NAMA. An officer or Board member of NAMA is obliged to report any such attempt to a member of the Garda Síochána and failure to do so is itself an offence.” The view on here is that it is practically impossible to legally fall foul of NAMA’s anti-lobbying rules because of all its exemptions, but when NAMA was being defended in its gestation by then finance minister, the late Brian Lenihan, he said on 10th September 2009 “the [NAMA] Bill includes a specific provision to outlaw lobbying of NAMA in relation to any of its decisions. Only a borrower and his or her agents will be authorised to deal with NAMA. It will be an offence to influence the Agency in the course of its work”
NAMA was asked for comment on the matter but had not responded at time of writing.
UPDATE: 14th December, 2012. At the 11th hour, Dunnes paid the €21.6m to Holtglen and in practice NAMA. The case returned to the commercial court today where Judge Kelly was no mood to indulge Dunnes Stores liberties. The barrister for Dunnes Stores said that the company had intended no discourtesy to the Court. The Irish Times reports “Mr Justice Kelly said he was glad to hear counsel say that because, on one view, the failure to pay could be regarded as a challenge to the court’s authority.”