Why did HMV Ireland shut up shop?
Amidst all the speculation about what is going to happen to HMV, one question remains unanswered: why did the 16 Irish stores, which employ 300 people, close, while the British operation stayed open?
The stores closed last week after Deloitte was appointed as receiver. Staff staged a series of sit-ins which only ended when they were told that they would be paid for this month – their wages are due this week.
An impossible-to-estimate number of consumers with HMV gift vouchers were left feeling very sore indeed.
While all this was going on, its British parent, HMV Group, continued to trade. Both the media and its chief executive, Trevor Moore, have been talking up its chances of being sold as a going concern, while there was much hope expressed that a “much-loved” brand would survive.
The Irish staff and consumers could be forgiven if they have fallen out of love with the brand. There seems to be little in the way of an explanation for why the subsidiary is being treated differently.
The most obvious and simplest explanation is that the 16 Irish stores were losing money and required the parent’s support to stay open. The parent is already insolvent – it cannot pay £30 million due to its lenders this month – and so cannot afford to provide cash to the Irish subsidiary.
As the British parent is in administration, it has court protection from its creditors in the UK. That protection cannot be extended to its Irish subsidiary as the UK courts have no jurisdiction here and there is no real equivalent to administration in the Republic’s company law system.
The most obvious way for the Irish operation to get protection from its creditors is to go into examinership. But for that to happen, HMV Ireland Ltd has to convince a High Court judge that it has a reasonable prospect of survival. If it has been relying on its parent for support, that could be difficult.
As a result of guarantees and security given to the group’s banks last year, HMV Ireland is potentially on the hook for its parent’s debt, ensuring that it has been sucked into the whole insolvency process. It the circumstances, appointing a receiver and shutting up shop, at least for now, would presumably have looked like the quickest way of dealing with the problem.
But what if the Irish stores were profitable...?
Davos to discuss euro zone 'way forward'
It’s January, it’s snowing: it must be time for Davos.
This week the great, the good and the seriously wealthy will again descend upon the Swiss mountain-top resort for the strictly invitation-only World Economic Forum, which kicks off today at 5pm Irish time.
Digicel chairman Denis O’Brien will mingle with fellow captains of industry including Lakshmi Mittal, chief executive of steel giant ArcelorMittal; Brian Cornell, chief executive of Pepsi; and Carl-Henric Svanberg, chairman of BP.
Minister for Finance Michael Noonan will attend with Taoiseach Enda Kenny, who will speak on a panel alongside three other European leaders – outgoing Italian prime minister and former European commissioner Mario Monti; prime minister of the Netherlands Mark Rutte; and the Polish leader, Donald Tusk.
The topic? “The Euro Zone Crisis: The Way Forward.”
Of course whether or not the “way forward” includes a deal on Ireland’s bank debt remains to be seen and is likely to form part of the discussion.