The examiner of the stricken online garden furniture seller Rathwood Home and Garden World has said prospective purchasers will have to make “appropriate provision” for out-of-pocket customers as a means of “preserving any remaining goodwill left in the business”.
Padraic Bermingham, of Strata Financial, said bidders would have to make allowances for the “treatment of outstanding customers’ orders” not covered by a bank chargeback or refund claim.
Rathwood was placed into examinership late last month after a successful petition by two subsidiaries of Anhui Morden Living, a Chinese furniture supplier, which is owed about €2.8 million. Customers are owed an estimated €2.5 million.
Padraic Bermingham, of Strata Financial
Rathwood principal credit card acquirer, Elavon, estimated a chargeback exposure of up to €1.6 million
The examiner has been working to restore Rathwood’s banking facilities, which were largely suspended because of the “exceptionally high level of anticipated customer refund claims”, known as chargebacks.
Bermingham noted that in the absence of provision for out-of-pocket customers, the future prospects of the company’s online business, which historically accounted for approximately 92 per cent of trading activity in peak years, would be “materially adversely affected”.
Nine potential bidders have expressed an interest in the company, of which eight have signed non-disclosure agreements. Final bids for the company must be submitted by June 2.
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Last week the High Court heard that a Cork shipping company said it would “resist any attack” on its security over the assets of Rathwood, which it got just before the company fell into examinership.
Legal papers filed last week show that a dispute has erupted between National Seaways, a subsidiary of Masterlink Logistics, and Anhui. National Seaways secured a debenture over the company’s assets in March, which related to a €708,000 debt. In an affidavit filed with the High Court last week a company representative said “any attack upon the National Seaways debenture will be fully resisted”.
In Anhui’s petition, its representative, Liu Liu, claimed National Seaways had put Rathwood’s directors, James and Thomas Keogh, “under significant pressure”. She also claimed that National Seaways had suggested the Keoghs place Rathwood into liquidation and buy back the assets. In Anhui’s filings, Liu Liu said she was concerned over “the circumstances surrounding and the validity of” the National Seaways charge.
An affidavit filed by Wayne Carey, a business development manager at National Seaways, rejected that claim, stating that “at no time did National Seaways or any of its agents suggest any type of a phoenix company proposal”.
Rathwood has more than €18 million in liabilities.
The High Court heard last week the company had a reasonable chance of survival after restructuring, and Judge Rory Mulcahy noted Bermingham’s “Trojan work” since his appointment.
Bermingham has worked to restore a supply of furniture and said “most of the suppliers have indicated a willingness to continue trading with the company”.
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