An interim examiner has been appointed to Best, the company operating thirteen Best Menswear stores across Ireland and two other fashion stores employing 130 people.
The sudden closure of Clerys department store in Dublin last month had a “catastrophic” effect on the cashflow of Best as it was a concession holder operating its largest store from the Clerys premises, the court heard.
The damage occurred as a result of the loss of some €270,000 held by Clerys in trust for Best arising from prior sales and the loss of trading revenues since Clery’s closed, Rossa Fanning BL, for the company, outlined.
Some €500,000 stock was also locked into the Clerys building and could not be sold, he said. While the company got access to the stock a week after the Clerys closure, it remains unable to use its largest store and will suffer significantly from loss of future cashflow from there, he said.
The stock is currently on sale at a pop-up shop on Parnell Street in Dublin.
Best, established in 1948 and with registered offices at Finglas, Dublin, suffered over recent years due to the economic downturn and is currently unable to service its bank debt. An independent expert, accountant Michael McAteer of Grant Thornton, believes it has a reasonable prospect of survival once certain conditions are met, counsel said.
Those conditions include a restructuring of the company and renegotiation or possible repudiation of leases, he said. The company had identified problems with high rents, coupled with decreasing sales from 2008 and its management had “not put their heads in the sand” .
Ms Justice Caroline Costello said she was satisfied to grant court protection to the company and to appoint Declan McDonald of PricewaterhouseCooper as interim examiner pending a hearing on July 30th.
The company's main creditor is Allied Irish Banks, owed some €12.6 million, while trade creditors are owed almost €12 million, the court heard. AIB was on notice of the petition and the bank hoped examinership might assist in achieving an effective restructuring of the company, the court was told.
Mr Fanning said Best currently operates 13 Best Menswear brand stores and two other stores, a Menswear outlet and a Denim Nation store, employing 130 people in all.
In a statement, David Jones, managing director of Best Menswear said it was "business as usual" for its stores while it works with the interim examiner to put it on a "sound financial footing" for the future.
“While trading is slowly improving, the biggest challenge remains unsustainably high rents and upward only rent reviews, which are a significant burden on our business,” Mr Jones said.
“These are a legacy of Celtic Tiger Ireland and do not reflect the economic reality we are all operating in today. A key part of the success of this process will be our ability to renegotiate rents and lease terms with our landlords. It’s important that we succeed in this, for the future of the company.”
Mr Jones said the closure of its concession in Clerys last month had put an enormous strain on cashflow and compounded the company’s trading difficulties.
He said it remains unclear as to when the monies owed will be paid or how much his company will receive.
“We believe that the appointment of the examiner and the adoption of a range of cost control measures, will give Best Menswear a solid platform to continue to trade in Ireland,” he said.
Best is part of a wider group of related stores employing almost 200 people in 19 outlets, including several concession stores operated by other parties in Ireland and the UK. Those companies are not affected by Best’s application.