November 11th 2000

Farmers owed over £800k for their grain

By Paul Mooney

A provisional liquidator was appointed to grain merchant Kavanaghs in Maynooth last Friday while sister company Dardis and Dunns has been placed in receivership.

Combined debt in the group is now estimated at £20 million including up to £800,000 owed to 45 farmers.

Most of the farmers are located around North County Dublin and South Meath and they supplied 10,000 tonnes of green grain to the company, either to the Dardis and Dunns intake at Ashbourne or to four Drummonds branches which took in and dried grain for the firm.

The value of this grain is over £800,000 but on-account payments of some £250,000 were made, leaving these farmers owed about £570,000.

These farmers are pursuing their claim through IFA along with a small number of other farmers who sold dried grain to pig units operated by Kavanaghs and who are owed payment for about 1,000 tonnes, valued at over £100,000.

At least two other farmers who supplied large tonnages of dried grain to Kavanagh piggeries are pursuing payment separately from IFA.

This week IFA warned that grain delivered by farmers and not fully paid for remains the property of farmers and it warned that no claim should be made on this grain by any other creditor or by a liquidator or receiver.

Further details emerged this week on other creditors. Goulding Fertilisers and Power Seeds, both part of IAWS, are owed for product. Small sums are also understood to be owed to Farringtons of Rathcoffey and Flynns of Mullingar.

However, the bulk of the grain firm's debts lie in AIB and ACCBank which are owed up to £17 million in total, much of it unsecured. AIB is understood to have called in Deloitte and Touche as receivers to Dardis and Dunns and to be holding the deeds for the firm's Ashbourne site.

Drummonds have placed 24 hour security on those of its branches which took in grain for Kavanaghs. There are reports that both Quinns of Baltinglass and Drummonds are now interested in acquiring or purchasing the Lewistown grain store owned by Kavanaghs. It is currently leased to Drummonds. Quinns are owed almost £1 million by Kavanaghs.

Also this week, residents near Oberstown in County Meath were informed by Meath County Council that Kavanaghs have just been granted planning permission for a earlier planned new mill on an 18 acre site in the area.

"I am warning any organisation that attempts to dispute farmer ownership of this grain, which is not paid for, to think twice," IFA grain chairman Ruaidhri Deasy said on Tuesday. Farmers' grain cannot be used to bail out companies or banks, he said. "The tradition of farmers retaining ownership of grain until paid for is customary and nobody will be allowed change it."

* Ernst and Young were appointed provisional liquidators to Kavanaghs by the High Court on Thursday on the request of Quinns of Baltinglass, R and H Hall and up to 30 other creditors.

An affidavit from company director Edward Kavanagh said that the company's problems arose from recession in the pig and poultry industries.

Mr Justice McCracken agreed to the holding within four weeks of creditor meetings to vote on a scheme of arrangement proposed by Kavanaghs. Kavanagh's legal counsel accepted that the firm was insolvent but argued that creditors could get 65p in the pound if the scheme of arrangement was adopted but just 50p if a liquidator was appointed.

In an affidavit Liam Quinn said it was clear that Kavanaghs was hopelessly insolvent with liabilities of over £20 million. It had assets of £14 million and admitted debtors of £5.5 million. He did not accept that creditors would do better under the proposed scheme of arrangement.

Counsel for IFA asserted that farmers had retention of title for over 10,000 tonnes of grain they had supplied to the company.