The High Court has approved a plan of arrangement with the creditors of a Co Mayo cosmetics company.
Cosmetic Creations Limited (CCL), trading as Lynoslife, applied for the deal after its revenue fell around 50% in 2021.
The court heard that the company’s restructuring, which involves taking control from a new investor, will ensure the retention of 60 employees at its Claremorris headquarters.
Judge Brian O’Moore issued orders that will allow the scheme to take effect Friday evening. He was satisfied that all legal requirements had been met and that this was a “fair and equitable” arrangement.
He said it was clear from the examiner’s evidence that the company has a ‘reasonable prospect of survival’ and that approval of the proposals will allow the continued employment of staff at the only remaining plant. from CCL to Co Mayo.
The company’s turnover was halved to 8.5 million euros in 2021, while it recorded an after-tax loss of 3.1 million euros against a profit of 2, 2 million euros in 2020.
The court was told the company had closed its Co Cork premises, which it bought during an expansion phase in 2018. It also made staff redundant following cost-cutting measures.
An interim reviewer was appointed to the company in February.
Stephen Brady, for the Examiner, said the program offered the company a reasonable prospect of survival. A new investor, who is injecting 1.4 million euros, will take control of CCL and two associated companies, he said. Existing executives and shareholders will step down under the proposals.
Under the plan, unsecured creditors will receive a 3% dividend, which includes commitments of €1.7 million to trade creditors. An unsecured claim of €4.6 million provided by approximately 100 pension investors will be partially novated to the new investor, while the remaining €2.7 million is treated as unsecured debt under the scheme.
Preferred creditors will receive approximately 7% of their claim. The revenue debt, including €1.6 million of PAYE and €492,000 of VAT, has been classified mainly as preferential, although it will receive 100% of its €228,000 debt deemed super-preferential under the plan.
CCL’s guarantee on a loan of 4 million euros advanced to a sister company in 2018 by Invest 123 Nominees Limited falls.
Staff and customers
Company lawyer John Lavelle said the company supported the arrangement, which had no objections, and that its priority was to ensure business continuity for staff and customers.
Asking for an interim reviewer a few months ago, the company said it had encountered “serious operational and financial challenges” since 2020 and into 2021.
Among the problems encountered was the closure of non-essential outlets for long periods, while changes in socializing and working habits led to a drop in demand for tanning products and other cosmetic products from CCL, did he declare.
CCL launched its own brand of disinfectant, which initially led to a significant increase in sales, but by the end of 2020 the market had become saturated and the market price had dropped significantly, he said.
In the years leading up to 2020, the group invested heavily in expanding its capacity to meet expected sales growth, it says. The company said it found itself with excess capacity and a high cost base that it could not sustain when revenues did not grow as expected from 2020.