# Receiver appointed to Superquinn



## Complainer

See [broken link removed] for breaking news from the Irish Times


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## RonanC

This will probably see the end of the Superquinn name unless Fergal Quinn fancies buying back the business at a knock down price. I can see the likes of Sainsburys or Morrisons having a good look. Asda will also be interested. The stores themselves are meant to be profitable, so a sale shouldnt be a problem. The massive amount of debt is a problem. 

I think everyone is hoping and praying that the 2,800 staff along with suppliers and support staff wont be affected by this move.


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## Guest105

400 million is a huge amount of debt for any business willing to take it on.  it's not far off half a billion.  Aldi/Lidl have taken alot of business off  them.

It's being discussed over on politics.ie


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## Brendan Burgess

It's very likely that the Receiver would sell the business without the debts and use the proceeds to pay some of the debts. 

I would think that Fergal Quinn might be interested in buying back the business. I presume he still has the cash he got when he sold it.

Brendan


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## RonanC

cashier said:


> 400 million is a huge amount of debt for any business willing to take it on.  it's not far off half a billion.  Aldi/Lidl have taken alot of business off  them.
> 
> It's being discussed over on politics.ie



The business, as it is, is worth a good bit of money. Someone would be more than willing to buy/pay off some or most of the debt to allow them move in and give some much needed competition in the market. The owners, Select Retail, own a debt, their banks own the business at the moment. I can see somebody getting a nice business at a knock down price and the debt being reduced significantly.


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## Armada

Great to hear that an Irish company (Musgrave) has bought SQ with a promise to keep all  2800 employees.


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## horusd

Armada said:


> Great to hear that an Irish company (Musgrave) has bought SQ with a *promise to keep all 2800 employees*.


 
I wonder how this will be possible? I have always thought that comparatively, SQ are way over-staffed, and under-worked.


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## dewdrop

Its amazing what effective management can achieve.


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## Purple

This is all part of the conspiracy by the Peoples Republic of Cork to “ride” the people of Dublin.


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## Mpsox

horusd said:


> I wonder how this will be possible? I have always thought that comparatively, SQ are way over-staffed, and under-worked.


 
Possibly that's because SQ prices are too dear so fewer people go into their stores. Greater buying power from the enlarged group may allow them to cut their prices in the future


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## dewdrop

Some years ago if i expressed the views in Post 9 I would have got a rap on the knuckles!


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## Firefly

Purple said:


> This is all part of the conspiracy by the Peoples Republic of Cork to “ride” the people of Dublin.



Dream on handsome


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## Complainer

cashier said:


> 400 million is a huge amount of debt for any business willing to take it on.  it's not far off half a billion.  Aldi/Lidl have taken alot of business off  them.
> 
> It's being discussed over on politics.ie


I presume the buyer won't take on the debt. The banks will take the write off, and the taxpayer will kindly cover this. The new buyers will get a good business at a bargain price, thanks to the taxpayer.


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## Brendan Burgess

Complainer said:


> The new buyers will get a good business at a bargain price, thanks to the taxpayer.



You are dead right Complainer. The Receiver should have simply closed down all the stores and fired the staff and they should have left the stores empty. Why should the taxpayer be helping a successful business get a bargain? It would be much better for the banks to write off the entire debt of €400m than to have a smaller loss but to save an enterprise.


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## Sunny

Complainer said:


> I presume the buyer won't take on the debt. The banks will take the write off, and the taxpayer will kindly cover this. The new buyers will get a good business at a bargain price, thanks to the taxpayer.


 
Who knows. They might have bought the business for a nominal amount and kept the majority of if not all the debt. Or as Brendan says, perhaps you would like them to liquidate the business, the banks lose most their money, a profitable trading company goes bust, a large competitor goes from the Irish retail market and 2,800 people lose their jobs.

Still, don't let the lack of facts stop you from making wild accusations once again.


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## Purple

Welfare payments for 2100 people would be a minimum of €500’000 a week. Add to that the lost income tax, VAT and general commercial activity within the economy as well as the losses suppliers would have to take and it becomes a massive figure. Then of course, as pointed out, the debts are currently owed to state owned banks and a subsidised rescue package looks like a sweet deal for the exchequer. I’ve no problem with it, even taking into account that the buyers are from Cork 

You really didn’t think that one through Complainer, or do you have issues with Cork people as well?


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## Complainer

Isn't it strange how the people who are most vehemently against any possibility of debt forgiveness for individuals are so creative when it comes to finding reasons for corporate debt forgiveness? Double-standards anyone?


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## Purple

Complainer said:


> Isn't it strange how the people who are most vehemently against any possibility of debt forgiveness for individuals are so creative when it comes to finding reasons for corporate debt forgiveness? Double-standards anyone?



No to both points as they are two different issues.
Superquinn is not having it's debt forgiven; the business is being taken from its owners and sold to pay off the debt. It is being sold as a going concern, that's all.


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## Brendan Burgess

Hi Complainer

Has anyone raised corporate debt forgiveness in this thread? 

A company which had assets and liabilities has been put into receivership. 

The receiver has sold off those assets to an unconnected party. 

The company will still owe any balance after the proceeds of the sale are paid into the company. 

If the company is in deficit, it will go into liquidation.

If the shareholders gave personal guarantees, they will be on the hook for the deficit. 

Brendan


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## Sunny

Complainer said:


> Isn't it strange how the people who are most vehemently against any possibility of debt forgiveness for individuals are so creative when it comes to finding reasons for corporate debt forgiveness? Double-standards anyone?


 
Can you show me where it says there was debt forgiveness? The details of the sale weren't revealed. If the company was in that much trouble and was in danger of going under, the banks did the right thing to maximise recovery values. 

I am all in favour in changing the laws regarding individuals and bankruptcy laws to make it easier.


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## Statler

The purchase by Select Retail was a Propco/ Opco structure, essentially it was a property play and the supermarket business was secondary. Same story as so many others, too much debt to fund too high a purchase price for property on the assumption it could be re-developed and the market would continue to rise. Some of the names involved will be familiar: [broken link removed]

The supermarket business should be viable without the property component (Musgrave obviously think so) and for the sake of 2,800 jobs and the continuance of a competitor that stocks a reasonable proportion of Irish produce, I hope that is correct.


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## onq

Complainer said:


> I presume the buyer won't take on the debt. The banks will take the write off, and the taxpayer will kindly cover this. The new buyers will get a good business at a bargain price, thanks to the taxpayer.




Okay, okay. I get it. NOW i see why you're called "Complainer". LOL!

Look - what would the fallout have been otherwise?
All this "softness" towards business is to limit the fallout overall.

There is a bigger picture, as I had to learn about when I advocated that the banks should be let go to the wall initially.

I thought this level of understanding had percolated everywhere on AAM by now?

ONQ.


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## onq

@ Statler, thanks for that link.

The stats show its a business that's surviving as opposed to prospering

Look at the market share, sales figures and profit taking from the above link -

"The Musgrave Group had sales of €4.4 billion in 2010 and profits of €72  million. Its franchises have more than 20 per cent of the national  grocery market."

That's a profit of 1.64% on 4.4 BILLION(!) turnover.

Unless profits were almost entirely gobbled up by loan repayments on property, that's not very healthy.

I haven't looked at their figures but I suspect there was a downward trend in their year-on-year that couldn't easily be turned around.

While its a credit that they were able to trade profitably in a difficult trading environment, this was a confirmation that something needed to be done quickly.

ONQ.


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## Firefly

Hi ONQ,

On the face og it I agree but markup and margin in retail are extremely low. They depend on big volume. You'd also need to go through the accounts as perhaps large payments are made to the Musgrave family/ other shareholders. 

F.


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## Complainer

Brendan Burgess said:


> Hi Complainer
> 
> Has anyone raised corporate debt forgiveness in this thread?



You cover it nicely yourself when you say


Brendan Burgess said:


> If the company is in deficit, it will go into liquidation.


That's the debt forgiveness, as the debt is liquidated with the company. If the owners have given personal guarantees, they are probably meaningless now, if the individuals are bankrupted or NAMA'd. 

This is a prepack recievership. The Musgrave offer/acceptance didn't arise since the recievership was announced. It has obviously been in the pipeline for some time. Given that the main problem of the business is generally recognised as being the property debt, it is a fair bet that the main purpose of the recievership is to wipe out most/all of that debt.


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## Brendan Burgess

Hi Complainer

"if the individuals are bankrupted"

Surely that says it all. This is not about debt forgiveness, as I understand the term. If I say to my creditors, "sorry, I am insolvent" and they bankrupt me, I don't consider that debt forgiveness.

If I owe €400k on a house worth €300k and the lender writes down the loan to €300k while leaving me with ownership of the house that is debt forgiveness (which I am opposed to). If they repossess the house and write off the €100k shortfall after 3 years of debt settlement, that is an alternative to bankruptcy which I would call debt settlement and which I support. 

If NAMA or the banks involved in Superquinn wrote down their loans from €400m to €200m , I would consider that debt forgiveness.  But putting a company into receivership or a person into bankruptcy is not debt forgiveness.

It is an interesting point about the prepack receivership. This is a UK term - I don't think we use it in Ireland. I think it usually means that the beneficial ownership retain beneficial ownership. That does not seem to be happening in this case. 

The banks could have simply appointed a receiver who would have sold off the stock in a firesale and let the staff go while looking for a buyer for the properties. That would not have been in anyone's interests. 

I suspect that they had discussions with all concerned beforehand to keep the retailing business going. It seems to me to be a good thing.

We also have the Administration facility in Ireland whereby an Administrator could have been appointed and would have to get the court's approval for a scheme of arrangement. Not sure why this wasn't done. I suspect that the loans were secured on the properties so an administration might not have worked. 

All in all, this looks like a good result for a failing business.

The investors and  beneficial owners have lost everything. 
The suppliers will probably have to write off their debts but they would have lost everything anyway. 
The Receiver got the maximum price for the assets by selling it as a going concern.
The employees kept their jobs
The business keeps going
The banks will face a loss on their loans, but probably less than they would have faced if the business was not sold as a going concern.


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## Complainer

Brendan Burgess said:


> Surely that says it all. This is not about debt forgiveness, as I understand the term. If I say to my creditors, "sorry, I am insolvent" and they bankrupt me, I don't consider that debt forgiveness.
> 
> If I owe €400k on a house worth €300k and the lender writes down the loan to €300k while leaving me with ownership of the house that is debt forgiveness (which I am opposed to). If they repossess the house and write off the €100k shortfall after 3 years of debt settlement, that is an alternative to bankruptcy which I would call debt settlement and which I support.
> 
> If NAMA or the banks involved in Superquinn wrote down their loans from €400m to €200m , I would consider that debt forgiveness.  But putting a company into receivership or a person into bankruptcy is not debt forgiveness.


I guess the difference between the personal property/mortgage situation and the business situation is down to the ongoing value of the business (goodwill is the accounting term, I think) and the history of what happened here.

The history of course is that this was a leveraged buyout, where some property developers borrowed large amounts of money from banks to buy the business, and then dumped that debt back onto the business itself. This crippled the business, and the prepack recievership is arranged to allow the business to walk away from the debt. The broader banking history means that the State (in the form of the banks) is left to absorb the debt.

The new buyer will get to buy at a bargain price, as no time is given for open pricing on the market. They walk away with a debt-free bargain and the State picks up the tab.




Brendan Burgess said:


> It is an interesting point about the prepack receivership. This is a UK  term - I don't think we use it in Ireland. I think it usually means that  the beneficial ownership retain beneficial ownership. That does not  seem to be happening in this case.


It appears that in prepack recieverships, it is sometimes the same individuals who buy out the old business, leaving their historical debts behind, but this is not always the case. See http://en.wikipedia.org/wiki/Administration_(law)#Pre-pack_administration



Brendan Burgess said:


> The banks could have simply appointed a receiver who would have sold off  the stock in a firesale and let the staff go while looking for a buyer  for the properties. That would not have been in anyone's interests.
> 
> I suspect that they had discussions with all concerned beforehand to  keep the retailing business going. It seems to me to be a good thing.


I'm certainly not suggesting that it would be better to close down the business.


Brendan Burgess said:


> We also have the Administration facility in Ireland whereby an  Administrator could have been appointed and would have to get the  court's approval for a scheme of arrangement. Not sure why this wasn't  done. I suspect that the loans were secured on the properties so an  administration might not have worked.


If the loans were secured on the properties, wouldn't this security hold through the recievership, i.e. those debts would still have to be cleared, or the new entity couldn't take ownership of the properties?


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## Purple

Complainer, we don't know the details of what was or wasn't written off. You are jumping the gun here.


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## Sunny

Complainer said:


> The new buyer will get to buy at a bargain price, as no time is given for open pricing on the market. They walk away with a debt-free bargain and the State picks up the tab.


 
I don't know the ins and outs of the deal but it sounds like this was the best deal for everyone involved. We don't know what the banks are left with. I can't imagine they agreed to write down €400m euro of debt for a fraction of the amount owed. Especially since there are non-nama banks involved and you would have to consider these to be very aggressive in recovering value.


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## Shawady

Does Superquinn own it's own sites?
I know the one near me is in a prime location.


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## JoeB

What about the timing?

The receiver was appointed yesterday, and the receiver has sold the company today.

How has he had time to do due diligence on getting the best price? Surely the big companies., like Walmart or whatever can't have had time to put in a detailed bid in less than 24 hours.


So it appears, to me at least, that the receiver sold the company to the first bidder.. that would seem to be at odds with the requirement that he sells for the best price. 


It appears as if Superquinn was not offered on the open international market... as that can't have been done in less than 24 hours. So what happens if in the future a firm claims that they would have made a better offer than the one which was accepted in lightning time?


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## Sunny

Superquinn has been on the market unofficially for months. I would imagne Musgraves was the only/highest bid.


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## Complainer

Sunny said:


> I don't know the ins and outs of the deal but it sounds like this was the best deal for everyone involved. We don't know what the banks are left with. I can't imagine they agreed to write down €400m euro of debt for a fraction of the amount owed. Especially since there are non-nama banks involved and you would have to consider these to be very aggressive in recovering value.


True - we don't know what happened. However, there is every indication that the purpose of the recievership is to allow the new buyer to leave behind some or all of the property debt.



JoeBallantin said:


> What about the timing?
> 
> The receiver was appointed yesterday, and the receiver has sold the company today.
> 
> How has he had time to do due diligence on getting the best price? Surely the big companies., like Walmart or whatever can't have had time to put in a detailed bid in less than 24 hours.
> 
> 
> So it appears, to me at least, that the receiver sold the company to the first bidder.. that would seem to be at odds with the requirement that he sells for the best price.
> 
> 
> It appears as if Superquinn was not offered on the open international market... as that can't have been done in less than 24 hours. So what happens if in the future a firm claims that they would have made a better offer than the one which was accepted in lightning time?


Very true.



Sunny said:


> Superquinn has been on the market unofficially for months. I would imagne Musgraves was the only/highest bid.


But 'on the market' for an open sale by owners is very very different to 'on the market' for a sale by a reciever.

Why the rush?


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## Brendan Burgess

Complainer said:


> True - we don't know what happened. However, there is every indication that the purpose of the recievership is to allow the new buyer to leave behind some or all of the property debt.



Complainer 

I really don't think you get it at all on this one. 

Let me give you another example. You see a house for sale for €200k and you put in a bid for €180k and you buy it for €190k. You pay the solicitor and you get the keys to your new house. 

You later discover, that there was a mortgage on the house of €500k. Should you be accused of "leaving behind some or all of the property debt"? 

The new buyers bought assets not debts. The owners of those debts, the banks were delighted to have a buyer. 

Brendan


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## JoeB

OK, say Superquinn owes 400 million, but is only worth 200 million itself. So superquinn can be sold, for the 200m, and that is paid off the 400m owing.

Shouldn't the new owners have to pay the outstanding 200m? If not why not? And if it's the bank who chooses to write off the 200m, then the bank should take the hit.. if this is a taxpayer owned bank then this shouldn't be allowed., as private individuals benefit from taxpayer money.

The old owners of SuperQuinn get nothing, (the 200m sale price went straight to the bank), but nor are they chased for the outstanding 200m... but that's ok I suppose, as Superquinn is likely a legal entity in its own right.

But the Superquinn brand should be bankrupted... as it owes 200m.



We need to force banks to take their own losses,... has anything been done to allow that to happen,.. or is it still a case of 'welll, we're systemic, bail us out after our own appalling decisions'.. such a moral hazard, which we're doing nothing to prevent. The new system, two pillar banks, after our old system, three pillar banks, didn't work.


We need a sinlge, government bank, to take on all the systemic functions, and let private banks fail. Or else the international markets (ie bondholders of various countries), should be forced to insure national banks against systemic failure... by being the first to take haircuts, .. before any taxpayer is hit.


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## orka

JoeBallantin said:


> OK, say Superquinn owes 400 million, but is only worth 200 million itself. So superquinn can be sold, for the 200m, and that is paid off the 400m owing.
> 
> Shouldn't the new owners have to pay the outstanding 200m? If not why not?


Because they bought and paid for something worth 200M.  Similarly to Brendan's post previously, reword your post as a house sale:

"_OK, say JoeB owes 400k on his house, but the house is only worth 200k itself. So the house can be sold, for the 200k, and that is paid off the 400k owing._

_Shouldn't the new owners have to pay the outstanding 200k? If not why not? _" - doesn't really make sense does it?  

It is the old owners who have to take the hit, not the new owners.  And the old owners should be vigorously pursued by the banks for the shortfall.


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## JoeB

Using the house example.. the house doesn't owe any money, the owners of the house do.


In Superquinns case, Superquinn itself owes the money. (not Superquinns owner)

So that's the same as a house owing money.. and if a house owed 400K, it wouldn't be allowed to sell itself for 200K, and owe nothing.



If Superquinn owes 400m then that 400m debt should be sold with the company... allowing the company to seperate its debts from its assets is the problem. (In the house example, the owner owes the money, not the house, that's the distinction)


It seems that Superquinn, which owes 400m and has 200m of assets, is selectively selling the assets, and not selling the debt. 

I feel Superquinn should only be allowed sell itself, if the debts are also sold, and the new owners are liable for the existing debts.


I don't think football clubs can sell themselves and get rid of debt this way.. the debt is still owed by the club, and hence by the new owners.


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## JoeB

Another point... using the house example.


The bank would not allow a 200K house which owes 400K to be sold at all, as they lose out. So why is the bank allowing Superquinn to sell itself, if the bank will definitely lose out? 


Banks don't seem to take such a practical approach to house sales... for example, has anyone on AAM got their bank to agree to  a sale of a house with 200K negative equity? That's what has happened here with Superquinn. ..



edited to add: I agree that the bank have allowed the SQ sale as there is no hope of getting full payment, . but that equally could be said of struggling home owners.


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## JoeB

It's simple, the new owners should be liable for any debts owed by the company they have just bought...  why should they be allowed to buy assets only, and not debts?



On the receiver thing.. can the receiver even have examined the SQ books, in detail, in less than 24 hours?. I don't believe he could have,.. not at all. Could he have examined Musgraves bid in detail either?.. no would be my answer to that... how could he?, in less than 24 hours.. the bid was presumabely quite complex.

So I don't get it, not at all. If I was a bidder I wouldn't have had a chance to bid.


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## orka

JoeBallantin said:


> It's simple, the new owners should be liable for any debts owed by the company they have just bought... why should they be allowed to buy assets only, and not debts?


Because no distressed business would ever be sold.  

Without a deal like this, if the existing owners can't continue to operate, SQ would have to go belly-up completely, go into administration, stop paying its debtors, causing hardship to employees and suppliers (who I believe are safeguarded in this deal) and then finally months down the road when the brand is irreparably damaged and debtors paid small cents in the euro, buyers can pick over the bones that remain, probably picking it up for 100M.  Why is that a better option?


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## orka

JoeBallantin said:


> If Superquinn owes 400m then that 400m debt should be sold with the company... allowing the company to seperate its debts from its assets is the problem. (In the house example, the owner owes the money, not the house, that's the distinction)


SQ is not a stand-alone decision-making robot, it has owners.  The owners own a going-concern grocery business and they have also invested poorly in property.  The owners owe the money and the owners own the business (I'm sure there are multiple companies within the SQ private company which enables this separation to take place).


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## Brendan Burgess

Hi Joe

We might have to go right back to basics to explain this. 

We have to distinguish between two legal entities

sole proprietor and limited company.  

Any of these can have a trading name e.g. Superquinn. But Superquinn is not a legal entity.

A building is an asset. It does not own anything. It is owned by a legal entity.

In the current case, the legal entity is a limited company called Select Retail Holdings Limited 

It borrowed money which it used to buy assets e.g. buildings and the business. 

This company, presumably, is now insolvent. Its assets are less than its liabilities. 

Select Retail Holdings Limited      converts its property and business assets into cash by selling them to Musgrave Ltd.  The cash is used to repay the loans as much as possible. What is left is an insolvent company with no assets but with liabilities. 

What you and Rainyday seem to be suggesting is that Musgrave Ltd should pay good money to acquire a comination of assets and liabilities, where the liabilities exceed the assets. 

If the assets were worth €400m and the loans were €300m, then Musgrave Ltd would buy the package for €100m. But if the loans are €400m and the assets are only €300m, then they would require to be paid to take on net liabilities. 


Back to the simple house analogy. If a buyer at the Allsop auction valued a house at €100k, he paid €100k for the house. He does not care if the seller originally paid €50k for the house or €500k for it. He does not care if there is a mortgage of €50k or a mortgage of €500k.

he paid €100k and got an asset worth €100k.

Likewise Musgraves paid €x for an asset. They did not buy the liabilities. If they had done so, they would reduce the €x by the amount of the liabiliities.


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## dewdrop

It might be well to revisit the function of a Receiver which in simple terms is to realise the assets charged in the Debenture to repay the Debenture holder.


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## Complainer

This is far from being a normal business transaction in a normal business environment. If this were a normal business environment, the question of who pays what to who is entirely a private matter for the parties concerned. However, given that we have effectively nationalised banks, the matter of who loses out (i.e. the State) is a very public matter and a very public concern.

Superquinn CEO Andrew Street confirmed on the 6 pm News this evening what I said early this morning, basically that the receivership was a device to allow the business to walk away from their property debts. The very public concern is that these debts are now left to the taxpayer to cover, via the nationalised bank. 

It is particularly disappointing that the Quinn family choose to sell to the highly leveraged buyer, given the risk involved to the business and the State. They had a particular opportunity to create an employee-owned business, like John Lewis in the UK, and still walk away with more money than they could ever hope to spend in a lifetime. There is a certain obscenity about the taxpayer being left to pick up a debt of some hundreds of millions of euro, while a new buyer gets to buy a thriving business at a bargain price. This is morally wrong.

There is a very real question about the 'prepack' nature of this receivership. How can anyone stand up and say 'the price from Musgraves was the best value for money available' given that the deal was done in 8 hours. Why the mad rush? Why not an examinership to give the business time to review all options? At a minimum, the deal should include some kind of long term repayment deal for the taxpayer, whereby the debt gets cleared through the long term profits of the business.


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## Brendan Burgess

Complainer

You are still mixing up lots of different things here. 

1) it was immoral for Fergal Quinn to sell the business for a high price 5 years ago. I think few would agree with you, but you are entitled to your own sense of morality I suppose.
2) It was immoral for Fergal Quinn to sell it to a company which had to borrow. Again, I would not agree with that either. 
3) It was stupid of the banks to lend the money to the buyers. No more nor no less stupid than any of the other property based deals. 
4) It was immoral for Musgraves to buy the business from the receiver without agreeing to pay the debts as well. I and others have explained this, numerous times. 

Any losses  borne by the state were incurred when the loan was given and when the banks were nationalised. The sale of the business to Musgraves minimises the loss to the banks and to the state. We should be rejoicing at Musgrave's decision to buy it. 

Appointing an examiner is an interesting issue. It is very expensive and very disruptive. Musgraves may well have pulled out by the time the examinership was completed. 

Brendan


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## Sunny

Ok so apparently, musgraves paid €100m for the business which included I think 11 properties in Dublin and a distribution centre. Therefore, the banks will take the €100m and reduce the debt. I have a feeling the property portfolio of select property is larger than what was sold to musgraves and the banks will still have a charge over them. It is impossible to work out what the banks losses will be but I am willing to bet they did not accept a 25% recovery rate on the loans. The real losers could be unsecured creditors. 
I agree with Complainer about the nature of the deal and the way it was done but as Brendan says, we should be delighted that someone was willing to take the business as a going concern. None of the other grocery chains operating here would have done that. It would have been a pure property deal.


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## Complainer

Brendan Burgess said:


> 1) it was immoral for Fergal Quinn to sell the business for a high price 5 years ago. I think few would agree with you, but you are entitled to your own sense of morality I suppose.
> 2) It was immoral for Fergal Quinn to sell it to a company which had to borrow. Again, I would not agree with that either.


Not trying to be pedantic, but I didn't say the sale by Fergal Quinn was immoral, and I didn't raise a concern about the high price. I sait it was disappointing, and I raised a concern about selling it in a leveraged buyout.


Brendan Burgess said:


> 3) It was stupid of the banks to lend the money to the buyers. No more nor no less stupid than any of the other property based deals.


Agreed.


Brendan Burgess said:


> 4) It was immoral for Musgraves to buy the business from the receiver without agreeing to pay the debts as well. I and others have explained this, numerous times.


Again, that's not what I said. I didn't criticise Musgraves, who are presumably just out get the best deal they can. It is immoral for the State through the banks to be left to pick up the tab for property speculation, when there is a viable long-term business here that will be well capable of paying these debts in the long term, albeit longer than they had planned under their current banking arrangements.




Brendan Burgess said:


> Any losses  borne by the state were incurred when the loan was given and when the banks were nationalised. The sale of the business to Musgraves minimises the loss to the banks and to the state. We should be rejoicing at Musgrave's decision to buy it.


How can you be sure that the rushed sale to Musgrave's minimises the loss to the bank? How can you be sure that a higher price could not have been achieved from an international seller, if the sale had been given more time?


Brendan Burgess said:


> Appointing an examiner is an interesting issue. It is very expensive and very disruptive. Musgraves may well have pulled out by the time the examinership was completed.


Examinership doesn't seem to have done too much damage to Quinn Life. Musgraves might indeed have pulled out, but others (particularly international buyers) might have been pulled in.


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## Sunny

Apparently they paid €200m fit it now. It's all speculation. The only people who seem to gave a bad deal in all this are the unsecured creditors like suppliers. The banks and taxpayers seem to have come out of this quiet well.


----------



## LDFerguson

Complainer said:


> It is particularly disappointing that the Quinn family choose to sell to the highly leveraged buyer, given the risk involved to the business and the State.


 
The business was sold to Select in January 2005,which presumably means that the deal was put together in late 2004.  The property and banking sector looked VERY different then.  

Are you seriously suggesting that the Quinn family should have turned down a good offer to buy their business because they should have foreseen how things might turn out by 2011?


----------



## Brendan Burgess

Complainer said



> It is immoral for the State through the banks to be left to pick up the tab for property speculation,



OK, so you are saying that someone or something is immoral. 

I am genuinely trying to identify the evil, immoral person you are speakin about. I broke down the various actions in the earlier post and I don't think anyone did anything immoral. Stupid, yes. Immoral, no. 

Go back to the house analogy. 
If I sold my house for €400k  in 2005, when I felt it was worth only €200k, was that immoral? 
If I sold my house to a first time buyer who borrowed €400k, was that immoral? 
Was it stupid for the borrower to borrow that much? Maybe so, although it didn't seem like that at the time.
Was it stupid for the bank to give the mortgage? Maybe so, but it did not seem like that at the time? 
If an unrelated third party buys the house for €200k now, is that immoral? 
The borrower is probably unemployed and can't repay the deficit. If the bank writes that off, is that immoral? 

You and JoeB seem to suggest that a buyer of the house now for €200k should give some share of potential growth in value back to the bank or government. To me, that would be immoral.


----------



## Firefly

Complainer said:


> ...It is immoral for the State through the banks to be left to pick up the tab for property speculation, when there is a viable long-term business here that will be well capable of paying these debts in the long term, albeit longer than they had planned under their current banking arrangements.



I was listening to Matt Cooper yesterday evening and a commentator alluded to the fact that because of the debt burden on SQ, they were effectively starved of the necessary credit to invest in the supermarket side of the business. I've noticed the relatively zero level of advertising by SQ in the papers in the past few months...it's no wonder the other retailers are increasing their profits. So I don't think they could ever repay the loans whislt still competing with the other chains.



Complainer said:


> How can you be sure that the rushed sale to Musgrave's minimises the loss to the bank? How can you be sure that a higher price could not have been achieved from an international seller, if the sale had been given more time?



Given the nature of the business, had a buyer not being found, then there would be a lot of empty shelves in a small period of time. There would have been large scale redundancies and given the extremely low profit margins, the company would have experienced losses immediatly resulting in closure. All that would remain would be a few staff and some empty supermarkets....not sure if this would have attracted a higher price.

I'm not saying the deal is 100% good and I'm sure the devil is in the detail, but most of the parties seem to have done OK out of it. The State is getting something (which is more than it's getting for the other NAMA pproperties), workers keep their jobs and yes Musgraves are getting what could be the deal of the decade for them....but then again who knows....it may be a terrible move, but they are taking the risk I guess.


----------



## Purple

I think there are two issues here.
The wider underwriting on the banking sector by the people of Ireland (and the people of Europe through liquidity funding) is one issue. 
The sale of Superquinn is another.
The damage was done to Superquinn when their last owners bought the business from the Quinn family. The losses to the banks are a result of their stupidity in financing that deal. Why should the new owner be responsible for that? The banks screwed up; they should take the hit. That’s reasonable, logical and moral.

I think Complainer’s problem is with the fact that the people of Ireland are footing the bill for the banks stupidity. In that I agree with him but there ‘aint nothing we can do about that now. His anger, in my opinion, is understandable and reasonable but is directed at the wrong transaction.


----------



## JoeB

Well, I get it now to a degree.


Is the following correct?

A person wants to buy a house, so they, personally, apply for a loan. The bank is prepared to give a loan, but only with security.. and they want the  house as security. Having the house as security means that the lender has control over certain aspects of the house.. mainly the ability of the owners to sell their own house. So the owners can no longer sell their own house, they can only do so if the lender agrees. And the lender never agress if it will leave a shortfall.


So Superquinn want a loan... and Superquinn, in it's own right, is applying. (Superquinn the company, a legal person in its own right, applies for a loan),.. of 400m say. Do the bank want security on this loan?, and what security do they take?

(If the bank don't want security there's a problem,.. but it should be a problem for the silly bank, and not for anyone else.)
(If Superquinn itself doesn't apply for  a loan, but instead owners do.. well then the bank must have security on the individuals who applied, and they probably couldn't care less what happens to SQ, if the bank have adequate security on the owners themselves)

So in the SQ case, the bank likely have security on SQ itself, on SQ business, or on SQ property. And wouldn't this mean that the bank can block sales? So how can a receiver sell such a company if banks have the final say on selling?

So, in my opinion, SQ can only be sold if the bank agree to take a hit. The banks could choose to take hits on private house sales in neg. eq. but they don't. So the banks seem to write off huge loans, but not smaller ones.



I get the point though,.. if SQ has assets of 200m and debts of 400m, then SQ is worthless... in fact it's worth negative money. So yes, SQ simply cannot continue, and isn't worth buying unless the debts can be wiped...  because as Brendan says.. if both assets and debts are sold SQ would have to pay the new buyer 200m.. and they don't have it.

So the bank appear to be happy now, to get the 200m market value of the business, and write off the other 200m (All figures are made up, and are likely wrong). The laternative may be to get less. The social aspect should not be considered by the bank at all, .. it should be entirely a commercial decision, .. nothing to do with the social damage a failed SQ could cause. Unless the government want to intervene in the public interest, through legislation, or regulation or whatever. So the bank should be able to demonstrate that no better deal was possible... and I can't see how they were assured, if they did actually agree to sell to what must have been the first bidder.

But why should such an important decision, to wipe the debts, be left to the bank anyway, especially if the bank cannot take the hit? (well, only if the bank cannot take the hit, if they can, fine, take whatever hits they want and can afford). So both the bank and SQ are bankrupt now (if the bank cannot take the hit), and both should fail. (I understand that it might not be clear that the bank cannot take the hit, perhaps they can and the shareholders won't be happy)

But if the bank is government owned, then the government should be in the board room actually running the bank,. and a government minister should be writing the cheques. If a Gov. Minister was writing the cheques then there'd be no problems with bonuses etc, and we'd have a fair and consistent approach to writing off debts, instead of each bank operating according to its own whims. The government could also take social factors into account, which should be disallowed for a private bank.


I don't understand why government owned banks (i.e majority owned) continue to run themselves, in the same failing way as previously. Why doesn't the government use its veto vote to run the bank itself? Why do we accept our government saying things like 'well, the private bank, which we own, is making its own decisions, which we don't like, and despite the fact that we own the bank, we claim we can do nothing,..."... that's what happened in relation to bonuses.


----------



## Statler

Complainer said:


> when there is a viable long-term business here that will be well capable of paying these debts in the long term, albeit longer than they had planned under their current banking arrangements.



I think the assumption here is flawed (and will now go on and make some assumptions of my own that are probably also flawed). 
As Superquinn is private, details on profitability are not available, but Musgraves in 2010 generated a profit before interest and tax of EUR74.9m on sales of EUR4.4bn. Superquinn is a smaller company, the Irish Times quoted a revenue figure of approximately EUR500m.
If you make the (questionable) assumption that Superquinn generates a similar margin to Musgraves, that would give a profit before interest and tax of EUR8.5m. 
The interest bill on EUR400m debt at an interest rate of 4% would be EUR16m p.a.

While Superquinn may be a long term viable business, it does not appear to be capable of servicing (let alone repaying) that level of debt even over a prolonged period. Nobody was going to buy a business with an unsustainable debt burden and some level of writedown was inevitable. The issue of the taxpayer taking the hit for this and other property related fiascos is separate and discussed extensively elsewhere.


----------



## orka

Complainer said:


> How can anyone stand up and say 'the price from Musgraves was the best value for money available' given that the deal was done in 8 hours.





Complainer said:


> How can you be sure that the rushed sale to Musgrave's minimises the loss to the bank? How can you be sure that a higher price could not have been achieved from an international seller, if the sale had been given more time?





JoeBallantin said:


> So the bank should be able to demonstrate that no better deal was possible... and I can't see how they were assured, if they did actually agree to sell to what must have been the first bidder.


There's no way SQ was sold in 8 hours or to the only bidder to consider it. Musgraves wouldn't have had time to do their buyers due diligence, never mind the sellers assuring themselves they were getting the best deal (which may have been the only deal if no-one else wanted to bid). According to today's Irish Times:
"_TALKS ON the deal that yesterday led to Musgrave agreeing to take over troubled grocery chain Superquinn began in earnest last week, but the negotiations were really the latest staging post in a process that got under way earlier this year_"

"_In December, it appointed a new chief executive, Andrew Street. At the start of this year, he began implementing changes designed to generate more cash from the chain._
_In tandem with this, the company began a formal process designed to find either a new investor or a buyer that could inject new cash into the business._
_Musgrave’s, a wholesaler that owns a series of supermarket and convenience store franchises, was, along with British and international companies, one of a number of candidates which ran the rule over Superquinn at that stage._
_However, its liabilities made the business so unattractive that nobody was prepared to do a deal, or at least not while it was carrying the burden of big property debts._
_That meant the company was running out of options. In the end, its banks decided a receivership offered them the best way of separating the trading business from the property loans, and selling it with the aim of recovering some of their debt_."


----------



## Shawady

Maybe the property loans will go into NAMA, which is going to make a profit in 10 years anyway so what's to worry about..............


----------



## Firefly

Shawady said:


> Maybe the property loans will go into NAMA, which is going to make a profit in 10 years anyway so what's to worry about..............



We're gonna make so much money it will be like the SSIA on steroids!


----------



## Complainer

Brendan Burgess said:


> I am genuinely trying to identify the evil, immoral person you are speakin about. I broke down the various actions in the earlier post and I don't think anyone did anything immoral. Stupid, yes. Immoral, no.


The immorality lies with the banks (aka the State) allowing a prepack recievership to go through. They allowed Superquinn/Select to negotiate a deal with Musgraves, and rushed it through without taking the time necessary to ensure they got best value for the tax payer.



Firefly said:


> Given the nature of the business, had a buyer not being found, then there would be a lot of empty shelves in a small period of time. There would have been large scale redundancies and given the extremely low profit margins, the company would have experienced losses immediatly resulting in closure. All that would remain would be a few staff and some empty supermarkets....not sure if this would have attracted a higher price.


Other retailers have gone through examinerships - Chartbusters, Hughes & Hughes, Bestseller (Vero Moda, Jack Jones) - and come out the other side. I appreciate the SQ is a very large business, but other large businesses have gone through examinership as well.


Firefly said:


> I'm not saying the deal is 100% good and I'm sure the devil is in the  detail, but most of the parties seem to have done OK out of it. The  State is getting something (which is more than it's getting for the  other NAMA pproperties), workers keep their jobs and yes Musgraves are  getting what could be the deal of the decade for them....but then again  who knows....it may be a terrible move, but they are taking the risk I  guess.


Since when did a €200m loss for the State become a good deal. And as for the risk, sure if Musgraves borrow the money, no doubt the taxpayer will kindly cover any losses in the future too.



Statler said:


> I think the assumption here is flawed (and will now go on and make some assumptions of my own that are probably also flawed).
> As Superquinn is private, details on profitability are not available, but Musgraves in 2010 generated a profit before interest and tax of EUR74.9m on sales of EUR4.4bn. Superquinn is a smaller company, the Irish Times quoted a revenue figure of approximately EUR500m.
> If you make the (questionable) assumption that Superquinn generates a similar margin to Musgraves, that would give a profit before interest and tax of EUR8.5m.
> The interest bill on EUR400m debt at an interest rate of 4% would be EUR16m p.a.


So do you reckon that Musgraves are going to wait 23 years to get a return on their investment?


orka said:


> There's no way SQ was sold in 8 hours or to the only bidder to consider it. Musgraves wouldn't have had time to do their buyers due diligence, never mind the sellers assuring themselves they were getting the best deal (which may have been the only deal if no-one else wanted to bid). According to today's Irish Times:
> "_TALKS ON the deal that yesterday led to Musgrave agreeing to take over troubled grocery chain Superquinn began in earnest last week, but the negotiations were really the latest staging post in a process that got under way earlier this year_"
> 
> "_In December, it appointed a new chief executive, Andrew Street. At the start of this year, he began implementing changes designed to generate more cash from the chain._
> _In tandem with this, the company began a formal process designed to find either a new investor or a buyer that could inject new cash into the business._
> _Musgrave’s, a wholesaler that owns a series of supermarket and convenience store franchises, was, along with British and international companies, one of a number of candidates which ran the rule over Superquinn at that stage._
> _However, its liabilities made the business so unattractive that nobody was prepared to do a deal, or at least not while it was carrying the burden of big property debts._
> _That meant the company was running out of options. In the end, its banks decided a receivership offered them the best way of separating the trading business from the property loans, and selling it with the aim of recovering some of their debt_."


Fully agree, Orka. I can't understand how the banks clearly let Superquinn/Select negotiate a deal with Musgraves, when in fact, the banks are the owners (in a recievership). It should have been the banks doing the negotiating and ensuring that they got best value for money. Surely there was conflict of interest here?

Does anyone know the legalities around ensuring value for money in a recievership? I read on boards.ie or p.ie that they had to get somebody to sign off on an 'independent valuation', which seems like an amazingly light regulation.


----------



## Sunny

Complainer said:


> Since when did a €200m loss for the State become a good deal. And as for the risk, sure if Musgraves borrow the money, no doubt the taxpayer will kindly cover any losses in the future too.
> 
> 
> .


 
There is no €200m loss for the taxpayer. Figures are been bandied about but apparently State supported banks were owed less than €275m. They apparently sold the business for €200m. This will go to the banks. Apparently Select Properties are left with some property interests that can be liquidated and the banks retain charges over so the losses are further reduced. The banks actually did the right thing by the taxpayer. (lending in the first place is a different argument)


----------



## Firefly

Complainer said:


> Other retailers have gone through examinerships - Chartbusters, Hughes & Hughes, Bestseller (Vero Moda, Jack Jones) - and come out the other side. I appreciate the SQ is a very large business, but other large businesses have gone through examinership as well.



Again, these companies all deal in non-perishable goods with few suppliers. It makes them easier to shut and re-open. Supermarkets have very extensive supply management issues



Complainer said:


> Since when did a €200m loss for the State become a good deal.



Perhaps losing 200m was the best case scenario? 



Complainer said:


> And as for the risk, sure if Musgraves borrow the money, no doubt the taxpayer will kindly cover any losses in the future too.



I take your point. Since this whole thing (Sept '08) came about, there has been nothing done IMO to prevent this from happening again. From what I gather though, in this case, the Musgraves are almost exclusively engaged in retail.


----------



## Shawady

Isn't this part of the problem with the state owning the banks. 
In this case, they may have to weigh up the loss for the bank against what it would cost the taxpayer in redundancy, social welfare payments and loss of income tax for 3,000 people.


----------



## Complainer

Sunny said:


> There is no €200m loss for the taxpayer. Figures are been bandied about but apparently State supported banks were owed less than €275m. They apparently sold the business for €200m. This will go to the banks. Apparently Select Properties are left with some property interests that can be liquidated and the banks retain charges over so the losses are further reduced. The banks actually did the right thing by the taxpayer. (lending in the first place is a different argument)


Today's Indo reports the sale price as 'well over €100m', but you're right insofar as we don't know the actual figures. However, given that the whole purpose of the prepack recievership (as confirmed by Andrew Street on the news yesterday) was to allow the business to walk away from the property debts, there is undoubtedly some degree of loss, let's call it €x million.

Given the rushed prepack recievership, how can we have any confidence that €x million was the smallest possible loss to the State? Why did we allow Superquinn to negotiate a deal that should have been negotiated by the banks and their reciever?


----------



## Sunny

Complainer said:


> Today's Indo reports the sale price as 'well over €100m', but you're right insofar as we don't know the actual figures. However, given that the whole purpose of the prepack recievership (as confirmed by Andrew Street on the news yesterday) was to allow the business to walk away from the property debts, there is undoubtedly some degree of loss, let's call it €x million.
> 
> Given the rushed prepack recievership, how can we have any confidence that €x million was the smallest possible loss to the State? Why did we allow Superquinn to negotiate a deal that should have been negotiated by the banks and their reciever?


 
The independent were reporting €100m yesterday. Today it is €200m!

http://www.independent.ie/national-...as-euro200m-for-struggling-chain-2825887.html

There is no way Superquinn did this deal without the banks involvement. The banks held charges over all the properties that were sold so there was no deal without the banks. I think as mentioned above, there is a certain amount of a balancing act between keeping losses at a minimum and destroying a business with 3000 employees.


----------



## Statler

Complainer said:


> So do you reckon that Musgraves are going to wait 23 years to get a return on their investment?



No and I never said that. I am not sure what the point of your question is.


----------



## Brendan Burgess

> So Superquinn want a loan... and Superquinn, in it's own right, is  applying. (Superquinn the company, a legal person in its own right,  applies for a loan),.. of 400m say. Do the bank want security on this  loan?, and what security do they take?



Hi Joe

There is no legal entity called "Superquinn". 

There may have been a company called Superquinn Ltd owned by Fergal Quinn. He sold the property and the business and the trade name to a new company *Select Retail Holdings Ltd*

This company borrowed the money to buy the assets

So a receiver has been appointed to this company. 

The headline on this thread and in the media is not correct. a receiver has not been appointed to a brand name.  (By the way, it could theoretically be correct in that receivers are appointed over assets, rather than companies). However, any ire should be reserved for Select Retail Holdings Ltd and not for Fergal Quinn for selling to them or for Musgraves for buying from them.

Brendan


----------



## RonanC

Brendan Burgess said:


> Hi Joe
> 
> There is no legal entity called "Superquinn".
> 
> There may have been a company called Superquinn Ltd owned by Fergal Quinn. He sold the property and the business and the trade name to a new company *Select Retail Holdings Ltd*
> 
> This company borrowed the money to buy the assets
> 
> So a receiver has been appointed to this company.
> 
> Brendan


 
Brendan, 

A Receiver has been appointed to Superquinn, an unlimited company which is owned by two entities - Superquinn (Manufacturers) Limited and Tokad Company ( another unlimited company)

Tokad Company is owned by Select Retail Holdings and Superquinn (Manufacturers) Limited AND has had a receiver appointed also. 

Select Retail Holdings has also had a receiver appointed to it. 

It appears that all properties and land are in the name of Superquinn (an unlimited company) and mortgages have been put against the company showing this.


----------



## Complainer

Statler said:


> No and I never said that. I am not sure what the point of your question is.


At the time that I wrote, the reported investment by Musgraves was €200m for an annual before interest and tax of EUR8.5m (your figure), so the payback would have been 23+ years - which doesn't add up at all.


----------



## Statler

I do not believe the EUR200m figure. Also, your 23 years calculation ignores a number of factors including the obvious potential for cost savings and the impact of receivership.

In any event, my point still stands. There was simply too much debt in the company. Even assuming Superquinn (a retailer that has seen its market share fall from 9% to 6%, operating at the ‘higher end’ of the market in difficult economic conditions) generates double the margin of Musgraves (a solid operator with more than 20% share) the company would just about be able to meet interest on its rumoured debt of EUR400m but not be able to reduce that burden in any meaningful way. 

What is your basis for saying:


Complainer said:


> there is a viable long-term business here that will be well capable of paying these debts in the long term


----------



## Complainer

Statler said:


> I do not believe the EUR200m figure. Also, your 23 years calculation ignores a number of factors including the obvious potential for cost savings and the impact of receivership.
> 
> In any event, my point still stands. There was simply too much debt in the company. Even assuming Superquinn (a retailer that has seen its market share fall from 9% to 6%, operating at the ‘higher end’ of the market in difficult economic conditions) generates double the margin of Musgraves (a solid operator with more than 20% share) the company would just about be able to meet interest on its rumoured debt of EUR400m but not be able to reduce that burden in any meaningful way.
> 
> What is your basis for saying:


It is indeed a simplistic calculation. Today's reports suggest that the debt was €275m, so obviously the cost of repayment would be less than your original estimates.



Sunny said:


> There is no way Superquinn did this deal without the banks involvement.  The banks held charges over all the properties that were sold so there  was no deal without the banks. I think as mentioned above, there is a  certain amount of a balancing act between keeping losses at a minimum  and destroying a business with 3000 employees.


But why was it 'Superquinn doing a deal with the bank's involvement'. Should it not have been the other way round? Surely the existing owners and management team were conflicted in this matter? Let's take a hypothectical situation relating to any business in this scenario, whereby the management team is looking at two bids;

Bid A - €100m and keep management team in place
Bid B - €120m and replace existing management team

Which bid do you think will be nutured and supported to fruition by management?


----------



## Sunny

Complainer said:


> But why was it 'Superquinn doing a deal with the bank's involvement'. Should it not have been the other way round? Surely the existing owners and management team were conflicted in this matter? Let's take a hypothectical situation relating to any business in this scenario, whereby the management team is looking at two bids;
> 
> Bid A - €100m and keep management team in place
> Bid B - €120m and replace existing management team
> 
> Which bid do you think will be nutured and supported to fruition by management?


 
The owners were irrelevant to this. They don't benefit at all. The banks get all the proceeds and then more. Not sure what the management team of the superquinn business have to do with it. This was clearly driven by the banks wanting to protect their loans.


----------



## orka

Complainer said:


> But why was it 'Superquinn doing a deal with the bank's involvement'. Should it not have been the other way round? Surely the existing owners and management team were conflicted in this matter? Let's take a hypothectical situation ...


You can look at hypothetical situations all day long and discuss the rights and wrongs of each but where do you pick up that SQ were calling the shots with the banks going along meekly? From what I've read over the past couple of days it was very much the banks in the driving seat. Again from today's Irish Times:
"_The other option considered was examinership. This would have involved Superquinn getting High Court protection from its creditors, meaning the banks would have lost any real control over what happened next_." The banks called in the receivers so they could maintain control and it was the receivers that decided that the bid should go ahead.
"_In the end, its banks decided a receivership offered them the best way of separating the trading business from the property loans, and selling it with the aim of recovering some of their debt_."
And
"_Both Mr Street and Musgrave chief executive Chris Martin confirmed yesterday that preliminary talks between Musgrave, the banks and KPMG, which was about to be appointed receiver, opened late last week_." So the talks were between Musgrave, the banks and the receiver - not a vested-interest SQ person in sight...


----------



## Complainer

orka said:


> You can look at hypothetical situations all day long and discuss the rights and wrongs of each but where do you pick up that SQ were calling the shots with the banks going along meekly? From what I've read over the past couple of days it was very much the banks in the driving seat.





Sunny said:


> The owners were irrelevant to this. They don't benefit at all. The banks get all the proceeds and then more. Not sure what the management team of the superquinn business have to do with it. This was clearly driven by the banks wanting to protect their loans.


Listen to what Andrew Street said on the 6-1 news last night. He gave a clear indication that Superquinn controlled the process.



orka said:


> Again from today's Irish Times:
> "_The other option considered was examinership. This would have  involved Superquinn getting High Court protection from its creditors,  meaning the banks would have lost any real control over what happened  next_." The banks called in the receivers so they could maintain  control and it was the receivers that decided that the bid should go  ahead.
> "_In the end, its banks decided a receivership offered them the best  way of separating the trading business from the property loans, and  selling it with the aim of recovering some of their debt_."


Why would the banks have lost control in an examinership? Surely the purpose of the examinership would be to explore all options to get the business back on track (i.e. repaying the existing debts).



orka said:


> "_Both Mr Street and Musgrave chief executive Chris Martin confirmed  yesterday that preliminary talks between Musgrave, the banks and KPMG,  which was about to be appointed receiver, opened late last week_." So the talks were between Musgrave, the banks and the receiver - not a vested-interest SQ person in sight...


You don't believe that a deal was done in talks that 'opened late last week' surely? This deal has been in progress for a long, long time - long before the banks and KPMG got involved.


----------



## Statler

As I understand it 275m refers to the BoI/ AIB/ NIB facility, not total debt. 

I still do not understand how you came to the conclusion that 


Complainer said:


> there is a viable long-term business here that will be well capable of paying these debts in the long term



Could you elaborate a little on your thinking?


----------



## orka

Complainer said:


> You don't believe that a deal was done in talks that 'opened late last week' surely?


No - that would be you...





Complainer said:


> How can anyone stand up and say 'the price from Musgraves was the best value for money available' given that the deal was done in 8 hours.


Musgrave and other Irish and international buyers have been sniffing around SQ for months (years...) and I'm sure the main due diligence was done long before last week, undoubtedly facilitated and guided by SQ's management but when it came to the time to do an actual deal, the real interested parties (primarily the banks) had to become involved and negotiate a deal that they could live with.


----------



## intheknow

Superquinn was in trouble when feargal Quinn sold in 2005 and  out of the €400m paid to the quinns they had to pay the debts owed by SQ then. When SRH was put together they bought the SQ property and kept superquinn as a going concern with the plan to try and make some changes and then sell the SQ brand but keeping the property. But as they tried to expand  they got themselves in trouble with some (in hindsight) dodgey  property buys and leases like clongriffen.  Musgrave have been fishing for a while and while SRH may have tried to hang on to see if they could get a better deal the banks finally lost patience. In order for Musgraves to make a new success of SQ they had to make sure they were not left with the dodgey property and leases. But it was the unsecured creditors who have been caught in the cross fire


----------



## Complainer

Statler said:


> I still do not understand how you came to the conclusion that
> 
> 
> Could you elaborate a little on your thinking?



My thinking was based on the reported sale figure at that time of €200m. If the business was worth that up front to Musgrave, then it would be capable of repaying its property debt over time.



orka said:


> No - that would be you.
> ..


Quite the opposite - what I've been saying for two days now is that this deal was largely negotiated by SQ management long before the banks got involved. SQ management should not been negotiating a deal for the taxpayer.


orka said:


> Musgrave and other Irish and international buyers have been sniffing  around SQ for months (years...) and I'm sure the main due diligence was  done long before last week, undoubtedly facilitated and guided by SQ's  management but when it came to the time to do an actual deal, the real  interested parties (primarily the banks) had to become involved and  negotiate a deal that they could live with.


All true, but that doesn't answer the question of how you know it was the best deal available for the taxpayer.



intheknow said:


> But it was the unsecured creditors who have been caught in the cross fire


The taxpayer first, then the unsecured creditors.


----------



## orka

Complainer said:


> All true, but that doesn't answer the question of how you know it was the best deal available for the taxpayer.


I don't know that this was the best deal available for the taxpayer any more than you know it wasn't the best deal available for the taxpayer. With no evidence to the contrary, I think it is a reasonable assumption that the final negotiators, the banks and the receiver, would have been pushing for the deal that cleared the most debt (why would they do otherwise?) which is most likely the best deal available to the taxpayer.

I haven't heard any other potential purchaser complaining to the press that they would have done a better deal if only they were given a chance by the mean exclusionary receiver.  There's still time - the deal isn't approved yet so maybe a better deal will appear...


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## dewdrop

Thanks to RonanC for setting out the legal situation in this case. Usually nowadays several companies may be involved in a particular business. I notice 18 Receivers were appointed on the day when the superquinn connected companies were subject to the appointment of Receivers


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## Complainer

orka said:


> I don't know that this was the best deal available for the taxpayer any more than you know it wasn't the best deal available for the taxpayer. With no evidence to the contrary, I think it is a reasonable assumption that the final negotiators, the banks and the receiver, would have been pushing for the deal that cleared the most debt (why would they do otherwise?) which is most likely the best deal available to the taxpayer.


The 'evidence to the contrary' is;
- the fact that the process was led and driven by SQ management
- the first-time use of the prepack recievership process in Ireland
- the absence of any competition.

The reciever's priorities will be;
1) Getting paid as receiver (which includes bringing it to a quick conclusion)
2) Establishing their reputation to get more business as receivers in the future
3) Getting the best deal for their client, the banks

but I don't see any evidence that they had anything near enough time to ensure that they got the best deal for the banks and the State.



orka said:


> I haven't heard any other potential purchaser complaining to the press that they would have done a better deal


 Fair point, though perhaps the other potential buyers may well be outside the country.


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## orka

Complainer said:


> The 'evidence to the contrary' is;
> - the fact that the process was led and driven by SQ management
> - the absence of any competition.


There's no evidence - these are just your opinions.


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## DB74

It would appear that a large number of suppliers will be shafted here

http://www.rte.ie/news/2011/0721/superquinn.html


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## dewdrop

While i have utmost sympathy for the suppliers am i right in saying that normally in the case of liquidations and receiverships the ordinary trade creditors rarely get anything.


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## Sunny

Well at least it puts an end to the argument that the process was done by Superquinn out of self interest.


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## Purple

DB74 said:


> It would appear that a large number of suppliers will be shafted here
> 
> http://www.rte.ie/news/2011/0721/superquinn.html



So the number one priority was the state owned banks, i.e. the tax payer.
In light of this I'm sure Complainer will revise his views accordingly.


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## Firefly

dewdrop said:


> While i have utmost sympathy for the suppliers am i right in saying that normally in the case of liquidations and receiverships the ordinary trade creditors rarely get anything.



I think you're right. Those suppliers (if any) with exclusive deals with SQ are going to lose the most.


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## Complainer

Looks like the directors were/are still trying to control the deal, and have now thrown their toys out of the pram; [broken link removed]

Something doesn't stand up about Mr Street's resignation - either he doesn't understand the legal obligations of the reciever to pay debtors based on their security, or else he's just grandstanding.


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## dewdrop

I agree with Complainer regarding the resignation.


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