Monsoon Accessorize needs to shut 10 stores, High Court told

The women's clothing and accessories chain, Monsoon Accessorize, needs to close a minimum of 10 of its 18 stores if it is to have a reasonable prospect of survival, the High Court has been told.

Mr Justice Brian McGovern today appointed Declan McDonald of PriceWaterhouseCoopers as examiner to Monsoon Accessorize Ireland Ltd (MAIL) to enable the implementation of a restructuring plan to secure its future. It currently employs 269 people, of which 60 are full-time and the rest part-time.

The court was told all vouchers and store credits will be honoured during the period of examinership and its UK parent company Monsoon Accessorize Ltd will provide investment to ensure the Irish company can continue to trade until August 2014, when it is expected to return to profitability if certain conditions are met.

Among those conditions are the closure of a minimum of 10 stores and the securing of rent reductions in the remaining outlets, an independent accountant's report has said.

There also needs to be a corresponding reduction in employment, a renegotiation of royalties payable to the parent company, the writing down of liabilities of certain creditors and the redirecting of sales generated online in Ireland back to the Irish business, the report also recommended.

MAIL director and examinership petitioner, Brian Walsh, said in an affidavit the company believes each of these conditions and assumptions are capable of being satisfied. Commitments in relation to online sales and the renegotiation of the royalty payments have already been obtained, he said.

Bernard Dunleavy BL, for the petitioner, said while there would have to be a writedown of liabilities, the biggest creditor is the UK parent which had undertaken to continue funding the Irish company until August 2014, when it is expected to return to profitability.

The company will seek a repudiation of leases from certain stores but it would be more sophisticated than the usual repudiation sought in examinership matters, he said. It also has the resources to meet any claim for damages arising out of such repudiations, he added.

Counsel for the Revenue Commissioners said they were adopting a neutral position to the examinership on the basis that the company continued to meet its tax liabilities as it has done so far.

The Monsoon Acessorize business in Ireland thrived after it was set up with seven stores 18 years ago, eventually rising to a total of 21 outlets. Its fortunes changed in 2009 due to a collapse in consumer spending.

It closed three stores, in Kildare Village, Dublin Airport and Blanchardstown, over the last two years but the reduction in sales, coupled with high rental costs, led to its current difficulties.