More Supermarket’s Ħamrun outlet will not be put under administration since there is no plan in place for the company’s recovery and its position is irreversible, a court has ruled.
The Ħamrun outlet, which owes €250,000 in unpaid rent, was forced to close earlier this month when its electricity supply was cut off because of pending bills.
The outlet is part of a supermarket chain belonging to D More Holdings Ltd. The chain used to be partly owned by Ryan Schembri, a meat importer who last month fled the country owing millions after being threatened by loan sharks.
On October 17 More (Ħamrun) filed an application in the First Hall of the Civil Court to be put under administration in accordance with the Company Recovery Procedure.
To recover, it needed a fresh capital injection
Through this, a court can appoint an administrator to examine the financial situation and determine whether there is a reasonable chance of the company recovering from its situation.
Mr Justice Joseph Zammit McKeon, presiding over the application, noted that according to law such an application was to be filed by directors or creditors, or required an extraordinary resolution taken during the company’s general meeting.
In this case the company itself filed the application and there was no resolution even though it was considered vital at law.
The judge noted that this alone could have been sufficient to have the case dismissed but he took other factors into consideration.
In such proceedings, the judge said, the company needed to satisfy the court that there were prospects of recovery.
One of the legal advisers to Kurt Camilleri – a director of More (Ħamrun) outlet with Adrian Agius – had declared that the company was already in a state of insolvency in the sense that it was not in a position to settle its debts.
Although the court was told that a restructuring plan for the company existed, it was then informed there was nothing in writing.
Darren Casha, the sole director of D More Holdings, denied there was a plan and added that, given the debt it owed, the company could not recuperate.
His declaration showed that these proceedings would not lead to a recovery, the court said.
In order for a company to recover from this, it needed a fresh capital injection as well as a review of its direction, management and financial control.
The shareholder had not put more funds into the company and no investor would be prepared to invest a penny unless he was convinced that a viable business plan was in hand. Yet the court seriously doubted that such a recovery plan actually existed.
On Monday, creditors who are owed millions by More Supermarket chain said they were considering asking the court to place the sole shareholding company under administration.
Yesterday, in a notice to its members and to creditors of More Supermarkets, the Malta Association of Credit Management said it had held a meeting with Mr Casha.
Mr Casha was asked to prepare, at his cost, a Company Recovery Procedure application for the remaining companies of D More Holdings by not later than October 30 in order to protect the interest of the creditors.
“It was suggested that this court filing should be supported with a professional business plan, incorporating financial statements, budgets and forecasts as appropriate... Mr Casha was warned that failure to abide by the October 30 deadline would result in the immediate pursuance of action, without any further prior warning,” the association wrote.