Karen Millen gets court protection to restructure fashion business
Interim examiner from PwC appointed
The Karen Millen stores employ 65 people, trade from nine different locations around the country and are either standalone stores or are operated as concessions within the Brown Thomas chain.
Ms Justice Marie Baker appointed Declan McDonald of PwC as interim examiner to Karen Millen Irl Ltd, Warehouse Fashion Irl Ltd and Coast Stores Irl Ltd following petitions by Rossa Fanning on behalf of the companies.
The court heard the companies have a reasonable prospect of survival if a number of conditions are met including renegotiation of rents and closure of uneconomic stores.
The Karen Millen stores, employ 65 people, trade from nine different locations around the country and are either stand alone stores or are operated as concessions within the Brown Thomas chain.
Warehouse Fashions operates from 16 locations, employing 106, and from stand-alone and concession stores. Coast, employing 129, also operates from 16 locations including concessions in Debenhams, Arnotts and House of Fraser.
In their petitions, the companies say they traded profitably until the economic downturn in 2008 but difficulties continued as the economy declined with sales decreasing and onerous leases on premises remaining in place.
The brands have significantly underperformed in some of its retail stores whilst the concessions stores have performed. This is due to the concession rents being linked to turnover and to the changing shopping habits, particularly in the occasion-wear market, the petitions state. Reduction in costs Warehouse Fashion has incurrred losses of €200,000 for the first seven months of this year. For two years upto March last, Coast has had losses totalling €1.8 million. Karen Millen had an asset deficiency as of September 30th last of €2.1 million and is only continuing to trade because of the forbearance of other companies within the corporate structure.
All three companies have attempted to restructure both property and payroll costs.
All three have no secured or bank creditors but all are in debt to inter-group creditors for sums of between €3.1 million and €7.7 million.
An independent accountant’s report says the best interests of the companies and the employees would be served by continuing to trade during court protection and that they have a reasonable prospect of survival subject to conditions being met.
The independent accountant says creditors will be considerably worse off in a winding up situation than if allowed to continue as a going concern.
The directors of the companies are satisfied that with a number of changes to the operation of the businesses, they can as a whole trade profitably in 2015 and subsequent years. They recognise this can only be achieved through a further reduction in cost structure.
Ms Justice Baker ordered the cases return to court in three weeks.