Scrumdiddly’s ice-cream chain needs Scarp rescue

Scrumdiddly’s has five outlets, one in Kilkenny and the rest in Dublin, including the first shop it opened in Donabate in 2011 and its best-known store in Dún Laoghaire.

David O’Connor, a partner in BDO’s corporate recovery department, was appointed as process adviser on December 6. He will now work out a rescue plan for the company, which could mean writing down debts owed to Scrumdiddly’s creditors, who will get to vote on the draft agreement.

According to its most recent accounts, for the financial year ending August 2022, Scrumdiddly Ice Cream Ltd had €597,230 debts falling due within one year and net liabilities of €220,375. A bank loan of €139,616 was also outstanding.

The company, whose directors are Jennifer Kane and Darren McCormack, has 35 employees.

Mr O’Connor told the Irish Independent the company’s main debt is with Revenue, after it used the warehousing facility during Covid. He said it was not clear yet whether Revenue would opt in or opt out of the Scarp process, although so far tax officials had not expressed any concerns to him.

Scrumdiddly’s has an outstanding loan from AIB, which also dates back to the pandemic.

“The position with trade creditors is not so bad,” Mr O’Connor said.

“They had some difficulty coming out of Covid, when they expanded too quickly. They had concession stores in Penneys which did not work out. They had to pay for the fit-out, and in the end it cost them a lot more than they got in revenues.”

The process adviser said that the directors are talking to a number of investors and he is hopeful that a new investment will emerge to make the Scarp process a success within the statutory 49-day period.

Two years ago it was reported that Biavest, an investment vehicle established by David McKernan and Hilliard Lombard, had invested in the ice-cream chain. However, as they do not appear in the current list of shareholders, it is thought Biavest no longer has a stake in the business.

The directors of Scrumdiddly’s, who live in north Dublin, have said they initially launched the business to give Ms Kane a new focus as she recovered from breast cancer.

She had been diagnosed at the age of 31, at a time when she and Mr McCormack had three children under the age of six. Ms Kane had been a personal assistant to a surgeon in Beaumont Hospital, while her husband had run a kitchen-making business.

Scarp was introduced two years ago by the Department of Enterprise with a view to helping small firms struggling after the Covid lockdowns. A cheaper and quicker version of examinership, with almost no involvement by the courts, it gives financially distressed small companies breathing space from creditors while the process adviser works out a rescue plan.

The scheme is open to firms with no more than 50 employees, with a turnover not exceeding €12m, and a balance sheet not exceeding €6m. Only 50 Scarps have been completed so far, saving an estimated 560 jobs.