B&Q bid to have store leases set aside adjourned
High Court applications to reduce rent bill are part of DIY chain examinership process
B&Q’s store at Liffey Valley Retail Park in Co Dublin. Photograph: Alan Betson/The Irish Times
Home improvements chain B&Q’s bid to have several lease agreements for its stores set aside were adjourned at the High Court today.
The applications brought by B&Q Ireland Ltd, which are part of the process to secure the company's survival, will now be heard by the court next Wednesday.
The company, which operates nine stores across the country employing 690 people, entered examinership at the end of the January due to insolvency, with liabilities of more than €17 million to its parent company, Kingfisher plc.
B&Q cited falling revenues and high rents for its difficulties. A loss of some €20.5 million is forecast for the year ended January 2013.
Declan McDonald of PWC was appointed examiner to the company and is in the process of putting in place a scheme of arrangement with the firm's creditors. If the scheme is approved by the High Court, the company can continue to trade as a going concern.
As part of cost-cutting proposals, the company's store in Waterford will close with the loss of 92 jobs. It was originally intended to close a second store, but earlier this week it was announced that B&Q's store in Athlone will remain open.
B&Q believes its business could be viable if its rents are substantially cut and other cost-cutting measures are implemented. It is paying some €11.6 million in rent for the stores and has been advised this is about €5.8 million above open market rents.
Today, Ms Justice Mary Irvine was told by Rossa Fanning Bl for the company that applications to repudiate lease agreements in relation to B&Q's stores in Galway, Liffey Valley, Limerick and Naas could be adjourned on consent to next Wednesday's sitting of the court.
Counsel said talks were ongoing with the different landlords of those stores.
Counsel added that an agreement had been reached concerning the lease of B&Q's premises in Waterford.
Counsel said that it had been agreed with landlords James and Bridget Treacy of Butlerstown House, Waterford, that the lease of their store in Waterford can be repudiated as part of the examiner’s proposed scheme of arrangement.
The amount of damages for the repudiation of that lease is to be fixed at €5 million, counsel added.
Previously, the court heard B&Q came to Ireland in 2002 and expanded its number of stores during the economic boom, but has not expanded since 2008. Its turnover had fallen 24.2 per cent from a peak of €124 million in 2009 to some €94.2 million in the financial year to end January 2012.
The company, which has no debt to the banks or Revenue, sought the appointment of an examiner after Kingfisher stated the business was not sustainable and the levels of support required by B&Q Ireland were no longer feasible.
However, Kingfisher has indicated its interest in investing in the company if the business is restructured and a survival scheme is successfully negotiated.