The Irish Times
OCS Operations ‘hijacked’ funds owed to concession holders over period of time Judge makes orders allowing for payment of ¤654,000 to 50 concession holders
A method used by the former operator of Clerys to reimburse concession holders was “a type of Ponzi scheme”, it has been claimed .
A method used by the former operator of Clerys department store to reimburse concession holders was “a type of Ponzi scheme”, it has been claimed at the High Court.
Mr Justice Donald Binchy made orders allowing the liquidators of OCS Operations Ltd to make payments of some ¤654,000 now to 50 concession holders, whose estimated total debt is some ¤1.4 million.
The judge also granted an application by one concession holder, LS Catering, for permission to sue OCS Operations for damages for alleged breach of trust.
LS Catering, a company linked to businesswoman Lorraine Sweeney, operated a restaurant in Clerys from 1992. It is owed some ¤46,000, and was a victim of a “most serious breach of trust”, Jeremiah Healy SC, for the caterer, said.
Counsel said OCS Operations used a payment system where all trade receipts, including company and concessionaires’ receipts, were lodged into one bank account from which all payments by the company were made. On the 15th day of each month, the company would pay the concession holders concerning their sales for the previous month, he said.
The iconic city centre store closed its doors on June 12th last, with the loss of 440 jobs. The closure came three days before its operators were due to pay sales proceeds for May.
An investigation into the company’s accounts by the liquidators revealed OCS had been losing money and there were insufficient funds to cover what was due and owing, counsel said.
It appeared the company used money from the concession holders’ sales for its own purposes, he said. It appeared OCS Operations had “hijacked” concession holders funds “over a period of weeks if not months”.
The system where concession holders “were paid for this week’s sales with last week’s proceeds” was effectively “a Ponzi scheme.” His client, owed some ¤46,000, was a victim of a “most serious breach of trust”.
Mr Healy was making arguments during an application by the joint liquidators for directions permitting them pay out some ¤654,000 funds to about 50 concession holders. An estimated ¤1.4 million is owed to the 50 concession holders.
The liquidators sought directions from the court including whether the concession holders have a valid trust claim to funds held in the bank account of OCS Operations, in cash or in credit card receipts at the date of the liquidation.
James Doherty SC, for liquidators Kieran Wallace and Eamonn Richardson of KPMG, opposed Mr Healy’s request for an adjournment so an accountant for LS Catering could hold further discussions with the liquidators.
Mr Doherty urged the court to make orders now to allow for payment to the concession holders. The payments related to the period of June 4th to June 12th last and issues in respect of money due from sales made in May are still to be determined, counsel said.
Mr Justice Binchy said he would make the directions sought but stressed his order was not to be seen as determinative in respect of the May sales.