Compass Catering Ireland Ltd., a subsidiary of a global food services group, is embroiled in a legal battle with CNB Investments Ltd. following its €54 million acquisition of the family-owned school meals provider, Glanmore Foods Ltd. Compass alleges it was misled about Glanmore’s true financial standing at the time of purchase.

The Deal and the disagreement

In 2023, Compass Catering finalized the acquisition of CNB Investments Ltd., the holding company for glanmore foods Ltd. Glanmore specializes in providing pre-packaged hot and cold meals and snacks to approximately 450 primary and secondary schools,particularly those in disadvantaged areas participating in the DEIS (Delivering Equality of Opportunity In Schools) program.

The Department of Social Protection has announced plans to extend meal provisions to all schools by 2030, signaling a significant expansion of the market.

Key Players

• Compass Catering Ireland Ltd.: The plaintiff,part of a global food services group,alleging financial misrepresentation.
• CNB Investments Ltd.: The defendant, owned by John Mooney, Glanmore’s managing director, and his wife, Jennifer.The company is registered in Raheen, Rathcoffey, Naas, Co. Kildare.
• Glanmore Foods Ltd.: The school meals provider at the center of the dispute.

Legal Action and Allegations

Compass is pursuing damages for breach of contract under the share purchase agreement. The company is also seeking damages for deceit, fraudulent or negligent misrepresentation, and restitution for alleged unjust enrichment. Furthermore, Compass is requesting an injunction to prevent CNB from reducing its assets below €25 million or its cash reserves below €10 million pending the outcome of the legal proceedings.

CNB investments Ltd.denies all claims.

Court Proceedings

The case was admitted to the fast-track Commercial Court by Mr. Justice Mark Sanfey, following an submission by Joe Jeffers SC, representing Compass, with the consent of Brian Conroy SC, for the defendant. The case is scheduled to return next month.

The Heart of the Dispute: Overcharging Allegations

Compass claims that Glanmore initially supplied cold meals to schools. Though, during the COVID-19 pandemic, government funding expanded to include hot meals. By the 2022-2023 academic year, 93 schools were receiving hot meals from Glanmore.

Compass paid €54.8 million for Glanmore in 2023 and initially announced that the existing management team would remain in place. However, during a transitional management meeting in September 2023, Compass alleges that certain financial irregularities regarding the charging of schools for hot meals came to light.

Compass alleges that Glanmore had an undisclosed issue with its billing system,resulting in overcharges for hot meals. The invoicing system purportedly charged schools for hot meals even when a child declined the hot meal and opted for snacks rather.

According to Compass, Glanmore made a conscious decision to only refund schools that raised concerns, rather than proactively correcting the invoicing system and informing all affected schools.

An internal review by Compass allegedly revealed total overcharges amounting to at least €734,000.

Compass asserts that it would not have agreed to buy the business if it had known about this and that it was worth “significantly less” than it was worth.