Clearys

mariaalice

I know what happened with Cleary's was legally correct despite the fact that it was ruse to split the brand from the valuable building and avoid having to pay redundancy's.

The company that acquired the building are avoiding any scrutiny of how the deal came about it was not thought up on the Saturday the shop closed down, therefore to get a little more cooperation form them, the department of environment should intimate to them that difficulties with planning permission for redevelopment might arise if they are not prepared to cooperate. Now of course all this would happen unofficially.

My point is would that be morally acceptable after all it the government and by extension the tax payer thats going to pick up the tab.

Godge

mariaalice wrote: »

I know what happened with Cleary's was legally correct despite the fact that it was ruse to split the brand from the valuable building and avoid having to pay redundancy's.

The company that acquired the building are avoiding any scrutiny of how the deal came about it was not thought up on the Saturday the shop closed down, therefore to get a little more cooperation form them, the department of environment should intimate to them that difficulties with planning permission for redevelopment might arise if they are not prepared to cooperate. Now of course all this would happen unofficially.

My point is would that be morally acceptable after all it the government and by extension the tax payer thats going to pick up the tab.

One of the reasons Ireland features near the top of the list of least corrupt countries is that we don't do business like that. We actually enforce rules.

mariaalice

I would argue that it is not corruption as such just being pragmatic.

Godge

mariaalice wrote: »

I would argue that it is not corruption as such just being pragmatic.

It is corruption as you are applying different rules to different applicants.

Leroy42

Surely the solution to these types of instances is some sort of bond/insurance that every company must maintain in order to provide for any redundancy costs.

In Clerys case it was clear it was only surviving based on the continued support of the parent company and as such they should have to provide for some redundancy costs. To avoid the charge in the accounts the parent company would have to provide assurance that for the next financial year they will continue to support, if they don't, like in this case, then the redundancy costs fall to them.

Why should it fall to the state to provide the redundancy costs (the employees are entitled to it but why should the company get way without paying it?)

To avoid having to set aside the cash, a company could take out a bond or insurance or if they have the funds invest it like a pension type vehicle so that it sits outside the influence of the company itself.

Accountants could calculate the required fund based on the length of staff working, the viability of the company, and actuary's could base the required level based on the stats etc like in pensions

andrew

Leroy42 wrote: »

Surely the solution to these types of instances is some sort of bond/insurance that every company must maintain in order to provide for any redundancy costs.

In Clerys case it was clear it was only surviving based on the continued support of the parent company and as such they should have to provide for some redundancy costs. To avoid the charge in the accounts the parent company would have to provide assurance that for the next financial year they will continue to support, if they don't, like in this case, then the redundancy costs fall to them.

Why should it fall to the state to provide the redundancy costs (the employees are entitled to it but why should the company get way without paying it?)

To avoid having to set aside the cash, a company could take out a bond or insurance or if they have the funds invest it like a pension type vehicle so that it sits outside the influence of the company itself.

Accountants could calculate the required fund based on the length of staff working, the viability of the company, and actuary's could base the required level based on the stats etc like in pensions

Doesn't employee and employer PRSI mean that the state isn't really 'picking up the bill'?

Leroy42

andrew wrote: »

Doesn't employee and employer PRSI mean that the state isn't really 'picking up the bill'?

In a way, yes, but in reality it is just a form of tax.

in effect the holding company has sidestepped this cost. The state is there to pick up the pieces when something extraordinary happens. An unforeseen event causes the collapse of a company. For Eg, the company gets hit with a massive fraud etc like Barings Bank.

This is not the same. In effect the holding company simply took away their support and left the employees to fend for themselves.

If the PRSI is meant to cover it then why does any company need to pay redundancy, simply pass it over the government?

Valetta

What would you hope would be achieved by doing that?

andrew

Leroy42 wrote: »

In a way, yes, but in reality it is just a form of tax.

in effect the holding company has sidestepped this cost. The state is there to pick up the pieces when something extraordinary happens. An unforeseen event causes the collapse of a company. For Eg, the company gets hit with a massive fraud etc like Barings Bank.

This is not the same. In effect the holding company simply took away their support and left the employees to fend for themselves.

If the PRSI is meant to cover it then why does any company need to pay redundancy, simply pass it over the government?

Ah, I hadn't realised redundancy pay is a statutory thing. Yeah, seems like it'd make sense for companies to hold a 'redundancy reserve' or some fund reing-fenced for employees.

mariaalice

andrew wrote: »

Doesn't employee and employer PRSI mean that the state isn't really 'picking up the bill'?

If the employer in this case Cleary's does not pay the redundancy then it falls to the state so therefore the state is picking up the tab so to speak, saying employees' and employers pay PRSI is a very week argument. It is the fact that a construct was devised to hive off the valuable asset the building it was a deliberate attempt to avoided being open to paying redundancy.

That deal was put together by somebody and it was done very specifically so therefore a lot of legal brains went in to it.

mariaalice

Valetta wrote: »

What would you hope would be achieved by doing that?

I think it shows a complete disregard for the state, government and by extension everyone who lives in the state.

There are always people in the background legal firms, accountancy firm, people who make their living putting deals together they need to be accountable, why should say a legal firm for example with one hand make steady money from government contracts and at the same time be putting together reports for some deal maker telling them how to avoid costs and get the government to pick up the tab.

Leroy42

Valetta wrote: »

What would you hope would be achieved by doing that?

Company accounts are supposed to give a true and fair view of all assets and liabilities existing at the Balance sheet date. Every company has some liability to redundancy, it is up to them to prove how small that may be.

In this case, due to the very nature of the dependence on the continued support of the holding company, without which the company was insolvent, it should have recognised the potential liability. (I am saying this based on my idea, this is not what is actually required).

Most companies, by the fact of reserves and continued trading etc will effectively be able to cost this as zero, but in this case the holding company should be required to give a 12 month financial assurance, withdrawl of which then triggers the costs, which would either be borne by the company itself or the holding company as they stated they would continue to support the company.

I really don't understand why a company should not recognise this liability. In most cases it would be small to immaterial anyway, but it should be part of the accounts regardless.

glacial_pace71

The problem was that there were three sets of accounts. Firstly there was a holding company, OCS Investment Holdings ...
https://search.cro.ie/company/ListSubDocs.aspx?id=516491&type=C
... with a separate company carved out to hold the valuable asset of the Clerys building. This one was called OCS Properties:
https://search.cro.ie/company/ListSubDocs.aspx?id=516502&type=C
Then there was the dumping ground company, for staff, taxes and other liabilities. This was called OCS Operations:
https://search.cro.ie/company/ListSubDocs.aspx?id=516503&type=C

Basically when the Americans sold these companies to Natrium the latter clearly had its eye on the valuable buildings (OCS Properties), with the taxpayer to pick up statutory redundancy costs for the Clerys company (OCS Operations) once it was immediately liquidated upon acquisition.
Some of the concession holders would appear to have had a contractual relationship with OCS Properties, i.e. they were renting space in the building, but others would appear to have had a concession to trade from OCS Operations: it seems quite a mess, probably reflecting how it wasn't too easy for the split of the building from Clerys to be engineered without some legacy issues.
I'd be surprised that the auditors could sign off on the accounts in 2014 if OCS Properties was in such trading difficulties, e.g. why didn't it negotiate a rent holiday from OCS Properties? It'd appear that the latter was allowed gouge everything out of the situation, in effect hollowing out the Clerys balance sheet through asset transfer and rack-renting.
Given that the matter could ultimately end up before the courts it may not necessarily be wise to have a lengthy thread lambasting Natrium, as that could allow Natrium to argue that their ability to get a fair trial has been prejudiced. (However, that would presume criminal proceedings and indictable offences, i.e. jury-tried offences, which is highly unlikely. It'd be far more likely for civil litigation to arise, e.g. the concession holders and possibly the trade unions, on grounds of reckless trading, asset stripping and so forth. Similarly if the ODCE bring proceedings it'd be likely to be of summary jurisdiction, i.e. trial by judge without jury. Nevertheless the potential remains for Natrium to grasp a thread as a fig leaf under which to hide).

realitykeeper

A simple way of dispensing with the problem of companies dodging redundancy payments is to abolish statutory redundancy payments altogether. If companies did not have to pay redundancy, then the problem would never arise. Furthermore, it would make Ireland a more attractive place to invest because there would be one less major expense to be factored in, over the lifetime of a business. Also, from a moral perspective, what is redundancy if not money for nothing. Workers get paid for the work they do so why should they get a free handout in the end for doing nothing.

Another plus would be that the taxpayer would save a fortune because state workers would get nothing when they finish.

nice_guy80

realitykeeper wrote: »

A simple way of dispensing with the problem of companies dodging redundancy payments is to abolish statutory redundancy payments altogether. If companies did not have to pay redundancy, then the problem would never arise. Furthermore, it would make Ireland a more attractive place to invest because there would be one less major expense to be factored in, over the lifetime of a business. Also, from a moral perspective, what is redundancy if not money for nothing. Workers get paid for the work they do so why should they get a free handout in the end for doing nothing.

Another plus would be that the taxpayer would save a fortune because state workers would get nothing when they finish.

er, yes they would.
that is not covered under statutory redundancy legislation

Paulzx

realitykeeper wrote: »

Another plus would be that the taxpayer would save a fortune because state workers would get nothing when they finish.

I don't understand the connection with redundancy here????

Paulzx

realitykeeper wrote: »

Also, from a moral perspective, what is redundancy if not money for nothing.

Please don't even talk about morals in a thread that is about what the owners of Clerys have done. What's "moral" about hiving off the assets of a company into your back pocket whilst screwing creditors, staff and the state?


Forget about talk of "blocking" future planning for this building. Whats done is done. What we need to do is to ensure company law or legislation or whatever makes this legal is amended to ensure it makes it difficult to happen again

realitykeeper

nice_guy80 wrote: »

that is not covered under statutory redundancy legislation

Of course, how silly of me. Redundancies do not apply in the protected public sector.

nice_guy80

realitykeeper wrote: »

Of course, how silly of me. Redundancies do not apply in the protected public sector.

they do, actually.
In the likes of the OPW, County Councils, Duchas, OSI and lots of other government departments staff were let go during the recession

well, usually reducing numbers in the public sector is done by the government do is stop hiring to fill positions vacant due to retirements.
Which puts more pressure on the staff left to do the same amount of work with less staff with very little planning as to how that will work

Hotblack Desiato

It was pretty telling that many people (including myself) who felt sad that Clerys was closing, couldn't remember the last time they'd bought anything in there...

My mother used to shop there in the 80s but even then it had a reputation for being staid and excessively priced

I wasn't going to sign a petition to 'save' a store I haven't shopped in in years, because then I'd be an utter hypocrite. Clerys was too big, too staid and too outdated, it's been dying a slow death for years.

It needs to change into attractive ground floor / first floor retail and change the upper floors into other uses, hotel would be better than offices, but it's quite possible that there will be more people employed in the Clerys building of the future than there was when it closed.

I do feel bad for the concession holders and their employees, it was timed to just miss a payment to them so they have been cheated of most of a month's takings. The direct employees, no not really. It's been obvious for years that the Clerys retail business has been going down the tubes for a long time - to be honest I didn't expect it to re-open after the flood. It is the nature of capitalism that poorly run or outdated businesses eventually fail and better run and more innovative businesses replace them.

It doesn't really make any difference in the end about the Natrium takeover and how it was done, sooner or later Clerys was going to go bang and someone else would then buy the building and hope to make better use of it.

K-9

Mod:

Stay on topic please and no public sector bashing.

FreudianSlippers

mariaalice wrote: »

I think it shows a complete disregard for the state, government and by extension everyone who lives in the state.

There are always people in the background legal firms, accountancy firm, people who make their living putting deals together they need to be accountable, why should say a legal firm for example with one hand make steady money from government contracts and at the same time be putting together reports for some deal maker telling them how to avoid costs and get the government to pick up the tab.

It's not as simple as that - you're not talking about your local firm on the corner doing wills and probate. Hundreds of lawyers working in a firm where people barely know everyone on their floor, let alone everyone working in a commercial department.

Law firms have very good Chinese walls for the most part, and internal breach of same is gross misconduct which would effectively end your career.

Eric Cartman

Hotblack Desiato wrote: »

It was pretty telling that many people (including myself) who felt sad that Clerys was closing, couldn't remember the last time they'd bought anything in there...

My mother used to shop there in the 80s but even then it had a reputation for being staid and excessively priced

I wasn't going to sign a petition to 'save' a store I haven't shopped in in years, because then I'd be an utter hypocrite. Clerys was too big, too staid and too outdated, it's been dying a slow death for years.

It needs to change into attractive ground floor / first floor retail and change the upper floors into other uses, hotel would be better than offices, but it's quite possible that there will be more people employed in the Clerys building of the future than there was when it closed.

I do feel bad for the concession holders and their employees, it was timed to just miss a payment to them so they have been cheated of most of a month's takings. The direct employees, no not really. It's been obvious for years that the Clerys retail business has been going down the tubes for a long time - to be honest I didn't expect it to re-open after the flood. It is the nature of capitalism that poorly run or outdated businesses eventually fail and better run and more innovative businesses replace them.

It doesn't really make any difference in the end about the Natrium takeover and how it was done, sooner or later Clerys was going to go bang and someone else would then buy the building and hope to make better use of it.

this is the biggest point of the whole thing, if the business was viable it wouldn't have been asset stripped or closed. If your complaining about the closure and haven't bought anything there in the last 12 months then a hypocrite is all you are.

Geuze

Most people agree that the business wasn't viable in its current form. Fair enough.

But for the owners to walk away with 25-27m, and with the new owners acquiring a prime building, and yet the workers are left with nothing, even a hardened capitalist must admit that is unfair by any measure.

K-9

Might as well open another Burger Macs.

Permabear

This post has been deleted.

Geuze

Permabear wrote: »

This post had been deleted.

They used accounting/legal trickery to weasel their way out of paying redundancy.

Legal, maybe.

Moral, no.

Permabear

This post has been deleted.

nice_guy80

Best Menswear got into examinership because of the Cleary farce

€2 million owed by Clearys

FreudianSlippers

nice_guy80 wrote: »

Best Menswear got into examinership because of the Cleary farce

€2 million owed by Clearys

Not sure where you're getting that figure - reports are that €270k is the figure. Best Menswear isn't painting a picture of the strongest company if that level of loss put them in examinership.

They've even gone so far as to explain the real crux of the problem:

the biggest challenge remains unsustainably high rents and upward only rent reviews, which are a significant burden on our business

seamus

realitykeeper wrote: »

A simple way of dispensing with the problem of companies dodging redundancy payments is to abolish statutory redundancy payments altogether.

And allow a situation where any company can just close up shop overnight leaving workers without any money?

Eh, no thanks. The US employment law model is the last one you want to emulate. Closing down a business should incur a large cost to discourage any kind of economic tourism where companies can set up and shut up shop with the same level of ease.

Setting up shop should cost you nothing because the economy gains. Closing up shop should be expensive because the economy loses when you do it.

In fact, statutory redundancy should probably be expanded. Closing your business in Ireland should be something that generates substantial debate in the boardroom as to whether it's the financially prudent course of action.