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Matthew Vella
The supermarket owners whose pricebuster chain went belly-up, face a new creditor with Lm50,868 in unpaid dues after Price Club went into liquidation.
The company George Borg Ltd told a court that Wallace Fino, one of three of the Price Club shareholders, had bound himself with the company to pay the merchandise sold to Price Club.
But there are still no great expectations from creditors of the failed Price Club supermarket chain, since banks are still first in line to collect any outstanding debts, which total some Lm8 million.
Earlier in May, Price Club’s Swatar outlet was purchased by HSBC as part of a EUR7 million (Lm3 million) capital investment for a global call centre.
Creditors were hardly likely to see any money from that sale since it will be the banks, as hypothecated creditors, to be first in line to collect their dues.
The liquidator, Andrew Borg Cardona, has filed two actions against Priceclub Holdings, requesting the company’s liquidation, and asking the court to “lift the veil” and find the whole group of companies responsible for the insolvency of Priceclub Operators.
Priceclub Operators was the revenue-generating arm of directors Chris Gauci, Wallace Fino and Birkirkara FC president Victor Zammit, who lost just a Lm101,000 capital base when Price Club crashed.
The rest of the capital was spread onto other associated companies, leaving creditors indebted to Priceclub Operators chasing Lm8 million in debts. That way, the liquidation of Priceclub Operators would not affect the assets in the other companies.
When creditors were asking Price Club owner Victor Zammit about the precarious situation of the discount shopping chain by September 2000, Priceclub Operators was running at cumulative losses of Lm1.13 million, increasing to Lm1.55 million six months later.
Zammit has claimed his accountants and consultants had told him the company was heading for breakeven, but the chain was already doomed from the start. It registered pre-tax losses of Lm260,000 as early as 1999 and only registered a Lm21 million turnover by taking over two other supermarkets. When in 2001 creditors stopped advancing credit to the supermarket, directors Zammit, Fino and Gauci produced a 20 per cent investment proposal to creditors. Liquidator Andrew Borg Cardona described the proposals as an attempt to “defraud third parties to the tune of Lm1 million through their estimation of the value of Priceclub at Lm5 million, when the company was effectively bankrupt virtually from its birth…”
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