Liquidators appointed as Debenhams shuts down Irish stores
High Court told retailer’s Irish arm was loss-making even before coronavirus crisis
Debenhams denied accusations that it was cynically using the Covid-19 pandemic as an excuse to shut down its Irish stores. Photograph: Nick Ansell/PA Wire
The provisional liquidators were appointed on Thursday morning to Debenhams Retail Ireland Ltd, which operated 11 stores in the Republic of Ireland.
The application came before Mr Justice Paul Coffey, who said he was satisfied to appoint insolvency practitioners Kieran Wallace and Andrew O’Leary of KPMG as joint provisional liquidators of the company.
Last week it was announced the company was ceasing operations arising out of its UK-based parent’s decision to enter administration.
Rossa Fanning SC, for the the company, said it was “with great regret” that the retailer was seeking an order for its winding-up; however, the company was wholly insolvent and its directors had “no other option”.
He said the application to seek the appointment of provisional liquidators came after the company was informed by its UK parent that it was no longer in a position to provide it with financial support.
Mr Fanning said that the UK parent had been struggling in recent years and it had made a pretax loss for the year ending 2018.
Inside Business Podcast
The Irish company owes millions of euro to parties including Revenue, the landlords of the premises from which it had operated, trade creditors, other firms within the group, and its employees.
It had been making substantial losses before the Covid-19 pandemic had resulted in the stores being closed in late March, said Mr Fanning.
He said the Irish firm had made estimated losses in 2019 and 2018 of more than €40 million. The Covid-19 outbreak, he said, had compounded the company’s difficulties by firstly resulting in a reduction of footfall in the stores, before they had all closed.
The company directly employed more than 940 staff, and also provided more than 500 other jobs indirectly through the 26 concession stands operated by other retail firms located in its stores.
Mr Fanning said that following the announcement that the company, which successfully emerged from the examinership process in 2016, was to close its stores. it had received correspondence from the Mandate trade union.
He said that the union, which represents many of those employed by Debenhams, had used strong words and were critical of the company’s handling of the situation and specifically its treatment of the workers.
Mr Fanning said that while the union had quite properly raised concerns it has over the workers, it had accused the company of being cruel, cynically using the Covid-19 situation as an excuse to shut down the stores. He said his client rejected that allegation, adding that the Irish stores had been losing significant amounts of money well before the current pandemic.
The crisis, he said, compounded the problem and left the company with no other choice than to seek the appointment of the provisional liquidators.
The appointment of liquidators would ensure the orderly winding-up of the firm, and would be in the best interests of all concerned, said Mr Fanning.
Making the appointment, Mr Justice Coffey said that the evidence before the court was the company had been loss-making after it had emerged from examinership in 2016, and its difficulties had been compounded by the Covid-19 crisis.
However, the judge, noting concerns expressed by the Mandate trade union in relation to those who had worked at the stores, directed that the matter return before the court in two weeks’ time.