Dáil Éireann debate -
Tuesday, 13 Oct 1992

Vol. 423 No. 4

Adjournment Debate. - Animation Film Company Closure.

Tomás Mac Giolla

This issue concerns the loss of not just the 330 jobs in Island-bridge but around Dublin and right around the country. Don Bluth Entertainment Limited came to Ireland as Sullivan Bluth because of the outstanding talents available here in Ireland for animation films. In the field of animation this company are second only to the Walt-Disney Company. They have made such box office hits as An American Tail, The Land Before Time and All Dogs go to Heaven, all of which were huge successes.

They have brought together young Irish artists from many of our art schools and colleges around the country. Don Bluth himself has fully co-operated with and assisted the principal of the senior college in Ballyfermot in establishing Ireland's first school of animation where diplomas can be obtained in areas such as computer animation, graphics etc.

The 330 young people who are employed in Don Bluth Entertainment, and whose average age is 23, have completed another film, A Troll in Central Park, are in the final stages of another called Thumbelina and have a third film in production, The Pebble and the Penguin. Very little money is required to bring what also appears to be an outstanding film —A Troll in Central Park— to completion. Only a couple of hundred thousand pounds is required to finish that. The young people in that company have worked for six weeks without any pay to try to keep that company going. In fact more than half the staff came in the day the liquidator came to see if there was any hope of staving off the closure.

I am here to ask what the Government are doing about this. The Taoiseach has repeatedly said that the priority of this Government is jobs, yet we have not heard even a murmur of concern about the fact that 330 jobs are lost here. I have not heard of any Minister flying to the Netherlands to meet the three main directors to try to get them to agree to a joint venture with Merlin Films which I think could be brought to fruitation if the IDA, the Minister and the Government got their heads together to do that with the assistance of the Revenue Commissioners who are one of the creditors. Perhaps the Minister can tell us that something of that nature is being done.

I have heard no Ministers crying out nor any bishops thumping from the pulpits about the loss of 330 jobs in Dublin. Of course, it is only in Dublin and that is probably why; it does not cause the same concern as job losses elsewhere in the country. I am concerned not only about the 330 jobs but about the senior college school of animation where young people are preparing for and expecting jobs in Don Bluth Entertainment after their years of study there. There are far more applications than there are places available in that school of animation. This is a growth industry, not just one factory. It is a growth industry for this country sand could be of enormous benefit to our young people.

What precisely has the Minister been doing and what assistance is she getting at Government level, to ensure that this company is kept as a going concern? The Dutch directors did not even come over to attend the meeting. Is the Minister in touch with them? Are the Government or the IDA in touch with them and have they been in touch with Boorman and Merlin Films? What other offers have been made for the purchase of this company? If moves are not made within the next few days I expect that the company will go into liquidation, the films will be taken over by the Dutch directors to cover their expenses. Would the Minister let us know precisely what she has been doing.

Minister of State at the Department of Industry and Commerce (Mrs. O'Rourke)

I thank Deputy Mac Giolla for raising this matter on the Adjournment. He has given the background. There is therefore no need for me to go into it except to say that in May of 1986 there were training and employment grants worth £4.2 million with a target of jobs which was exceeded by the company, and the IDA received for no charge a 4.7 per cent equity share in the company.

The studio completed four full length animation films in Ireland. They did not own the rights to those films; they only recouped the production costs. The company decided that to get an adequate level of profit they needed to own the rights of the films they made. With this in mind, in December 1989 they reached agreement with a Belgian company to invest up to $15 million to fund the next film. Then there was a major cost overrun in the making of that film and they got into serious financial difficulties in the early part of 1991. As a result the company entered into a series of negotiations with various parties the end result of which was the injection of substantial funds into DBE by a Netherlands Bank. This money was used to purchase the rights to one of the films made by DBE, pay off the outstanding loans, make a payment to existing shareholders and provide for operating costs since autumn of 1991. The operating costs include the development of two films, the two the Deputy mentioned. However, the funds again proved insufficient to meet the company's needs until the significant revenues from the distribution of those films started to accrue.

An examiner was subsequently appointed on 27 August of this year. The company had experienced severe cash flow problems as a result of a dispute between its financial backers, Mr. Jan Dirk Paarlberg through his company Pearl Equity Investment. MKB bought out the main shareholder and acquired 93 per cent of DBE and the dispute centred on attempts to obtain security for loans in the form of a charge on their film assets. The company's directors refused to agree to this and MKB refused to make any further advance available to the company. The examiner was unsuccessful in his attempts to secure additional investment for the company.

On 9 October just last week, a provisional liquidator Mr. John MacStay of Ernst and Young was appointed on the recommendation of the Revenue Commissioners who are owed, in this instance, £700,000, and Mr. MacStay has received permission from the courts to advertise the sale of the business without waiting for next month's formal winding up petition from the Revenue Commissioners.

Let me come to what action is being taken on the matter. The IDA are working closely with the liquidator and is also seeking to identify potential purchasers of the company and to convey any relevant information in this regard to the provisional liquidator. The liquidator's powers are limited by the court to safeguarding the assets of the company for the benefit of the creditors until such time as a liquidator is appointed. Being provisional, he is not in a position to sell the company's assets but will be providing interested parties with information. He has already been contacted by several interested parties since his appointment.

The company's major assets are three partly completed animation films, two studios and its team of trained artists. Deputy Mac Giolla is quite right in saying that there are very fine people of all ages but particularly young people trained professionally to the very highest standards in the college of which he spoke. They are imbued with determination and the skills they learned at college. They have had an opportunity to use those skills in the studios.

It is believed that, in the event of a liquidation, an attempt will be made to sell the assets as a package to an investor who would wish to complete the films at the Dublin studio using the company's present workforce. It is too early to say if the efforts now being made will secure the future of the company. However, I can assure the Deputy, and the House, that every effort is being made to save the company and the jobs. It is my wish, and that of the Government, that the various inquiries and efforts now being made, and the liaison between the IDA and the provisional liquidator, will lead to a fruitful result to the talks and negotiations. It is my wish, and that of everyone in this House, that the story of the animation studio and the fine people who work there will continue.

Mr. Mac Giolla

Will the Minister of State come back to me about MKB Investments Limited?

Mrs. O'Rourke

There is much toing and froing and it would not be correct to speak about the matter further but the intention is, if those efforts are successful to retain the workforce and continue the work.