High Court confirms examiner for Debenhams

The High Court has confirmed the appointment of an examiner to the company operating Debenhams eleven stores here.

Debenhams Retail (Ireland) Ltd directly employs 1,400 staff while 500 concession staff and 300 cosmetics staff also work in the company’s stores.

DRIL sought court protection earlier this month arising from consistent losses sustained since the recession in 2007 and following 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 was considered to have a reasonable prospect of survival if certain conditions were met, including securing court protection and approval of a survival scheme with the company’s creditors.

That would involve reducing rent costs, which the company says are well above market rates, plus staff costs.

Rossa Fanning , barrister for DRIL, said it has incurred losses of €22.6 million in the last three years and, while revenues had increased in 2015 and 2014, it continues to be loss making in the current year. It would be “business as usual” while a survival scheme was being negotiated, he also stressed.

When the matter returned before Mr Justice Brian McGovern on Wednesday, he confirmed Mr Wallace as examiner.

Creditors

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 continue to trade as a going concern.

While there was no opposition to the application, lawyers for Dooroy Ltd, landlords of DRIL’s stores in Henry Street, Dublin and Patrick Street, Cork, expressed some concerns about the examinership.

John Gleeson SC, for Dooroy, said, while it was not objecting to the examinership, it believed DRIL’s parent must be involved in the process as it was the parent's decision to withdraw support that caused the company “to collapse”.

His client believed the UK parent had been “calling the shots” in negotiations about the stores and it could not stand outside the examinership process.

Dooroy disputed suggestions by DRIL that negotiations concerning rents had been unsuccessful, counsel added.

James Doherty SC, for the examiner, said, based on the information he has collated to date, Mr Wallace agrees with an independent expert’s view the company has a reasonable prospect of survival.

Mr Wallace has been in contact with important stakeholders including the trade unions, Impact and Siptu, who represent workers at Debenhams, as well as creditors, and landlords of the company, counsel said.

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 €46 million and that is unsustainable.

The only alternative to examinership was liquidation with an estimated deficit of €264 million, the court has been told.