THE HIGH COURT has confirmed the appointment of an examiner to the department store chain, Debenhams Retail (Ireland) Ltd.
Over 1,400 staff are directly employed while 500 concession staff and 300 cosmetics staff also work in the company’s 11 stores.
Earlier this month Debenhams Retail (Ireland) Ltd (DRIL) sought examinership because of consistent losses sustained since the recession in 2007 and after the withdrawal of support of its UK parent company, Debenhams Retail plc.
Kieran Wallace of KPMG was appointed interim examiner, after the court was informed the company has a reasonable prospect of survival if certain steps are met. The conditions include court protection and the approval of a survival scheme with the company’s creditors.
That would involve reducing costs, including rent costs which the company says are well above market rates.
Concerns
The company represented by Rossa FaningBl said it has incurred losses of €22.6m in the last three years,. While revenues have increased in 2015 and 2014 it continues to be loss making in the current year.
The matter returned before Justice Brian McGovern today, who confirmed Wallace as examiner. Mr Wallace now has up to 100 days to put together a scheme of arrangement with creditors, which if approved by the High Court will allow the company to continue to trade as a going concern.
There were no objections to the application. However, lawyers for Dooroy Ltd, the landlords of DRIL’s stores in Henry Street in Dublin and Patrick Street in Cork, expressed some concerns about the examinership.
John Gleeson SC for Dooroy Ltd said while it was not objecting to the examinership it was their case the DRIL’s parent must be involved in the process. It was the parents decision to withdraw support that caused the company “to collapse” counsel said.
Counsel said his client the UK parent had been “calling the shots” in negotiations it had about the stores and it could not stand outside the examinership process.
Counsel added Dooroy Ltd disputes suggestions made by DRIL that negotiations the parties had concerning rents had been unsuccessful.
Survival
James Doherty SC for the Examiner said that based on the information he has collated to date Wallace agrees with the independent experts view the company does have a reasonable prospect of survival.
Wallace has been in contact with important stakeholders include trade unions Impact and Siptu who represent workers at Debenhams, as well as creditors, and landlords of the company. The examiner has also been in touch with the Mandate union, which represents the majority of staff in the stores.
The company operates four stores in Dublin, two in Cork, and others in Galway, Limerick, Newbridge, Tralee and Waterford. It says it owes its parent €46m, which DRIL says is unsustainable.
The only alternative to examinership was liquidation with an estimated deficit of €264m, the court was told.
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