Asbestos issues '˜undermined' Austins investment
A potential Â£130,000 bill to tackle asbestos within the Austin's building in Derry had proved a major factor in the company going into liquidation, the '˜Journal' can reveal.
The Journal has seen documents from McCambridge Duffy Insolvency Practitioners pertaining to the liquidation of the company which ran the Austins store and the issues that led to its closure in March with the loss of 53 jobs.
The documents show that sales within the department store had actually risen by almost 7% in the months prior to its closure, but that the unforeseen costs of dealing with asbestos, and the disruption to trading this would have entailed, proved to be a stumbling block to attracting investment.
Derry City Council officials raised the issue of dealing with the asbestos following the introduction of new regulations, in the Spring of 2015.
The Austins Department store building in the Diamond is currently owned by the City Hotel Group, but the actual retail operation was leased to Hassonzender, which has now gone into liquidation.
The Journal has been told that the Liquidator were still at the early stage of their investigation into the reasons for the demise of the company.
A report seen by the Journal however states: “As part of the policy of Best Practice, the company commissioned a full survey of the property and then passed the findings to the landlord, the City Hotel Group (CHG). However the CHG insisted that the matter be dealt with by Hassonzender - a position that was to pose major problems for the company’s ability to move forward.
“For seven months, from April to November, this one single issue was to undermine all the company’s future planning. For potential investors, this issue was always going to be a problem as it was estimated that the cost of the asbestos removal would be in the order of £130,000. “
In a statement to the ‘Journal’, a spokesman for the City Hotel Group said: “The City Hotel group had no knowledge of any asbestos related issues until it was notified by the tenant Hassonzender Ltd in March 2015.
“Legal opinion was obtained by the City Hotel Group which confirmed this was the responsibility of the tenant Hassonzender under the terms of the building lease.
“The City Hotel group were not involved in the discussions with potential investors.”
Hassonzender was incorporated on September 19, 2014, and began trading from Austins several weeks later on November 5th.
The documents state the objective of the new company was to “preserve the business going forward along with the 50 or so jobs.”
“Initial estimates suggested at least £150,000 to £200,000 would have been required in year one, primarily to restock the store,” the report states. In the Spring of 2015, meetings were taking place with a firm specialising in matching company buyers and sellers and meetings with other store operators across the North who might be interested in “investment or straight acquisition.”.
It was around this time that the Asbestos issue was raised. In November, 2015 the Company Director met with McCambridge-Duffy, and without any real investment being secured, it was agreed the Company could not trade beyond Christmas. However, a “turnaround specialist” was engaged who indicated that there would be investor interest but that the lease with the City Hotel Group would require “substantial amendments.”
Meetings were held in mid-February to address this but, the report states, “no progress on the vital issues was made” and the decision was taken to place the company into a Creditors’ Voluntary Liquidation.
A spokesman for McCambridge-Duffy said that the liquidator of Hassonzender Ltd. was appointed on March 8, 2016. He said: “A Liquidator has a statutory obligation to investigate the reasons for the demise of a company and in this case these investigations are at an early stage. It would not be appropriate to make any comment on the matters raised at this stage.”