The High Court has appointed a interim examiner to the well-known fashion retailer A-Wear.
The chain, which employs more than 350 people and operates 30 stores in Ireland and Northern Ireland, blames its current difficulties on high rents and increased competition.
The company hopes that the vast majority of those jobs can be saved. Today at the High Court, Mr Justice Peter Charleton appointed insolvency practitioner Mr Ken Fennell as interim examiner to Latzur Ltd, trading as A-Wear after an independent accountants report said the company had a reasonable prospect of survival if certain steps were taken.
These steps include the examiner putting together a scheme of arrangement with the firm’s creditors, which if approved by the High Court would allow the company to continue to trade as a going concern.
The court heard that obtaining a reduction in the rents the firm pays for its outlets will form an important part in the firm’s future.
Today, Bernard Dunleavy for the company said A-Wear, which has traded for many years, was purchased by it current owners from receivers in 2012.
While the current owners had reduced the firm’s annual loses from €5 million to €2.5 million they had taken things “as far as they can.”
High rents were "a significant problem" for the company, counsel said. Rent at its Grafton Street Sote in central Dublin accounted for 28 per cent of its revenues, he said.
In addition rent accounted for more than 15 per cent of revenues in 17 other stores, which counsel said was “much too high”.
He said a business plan put together by the company had identified which stores will need to close if agreements cannot be reached in relation to rents. In addition to the high rents, the company had faced increased competition, from low cost competitors, in the 18-35 years ladies fashion market.
Steps have been taken by the company to reposition itself in that key area, he said, adding that some progress has already been made.
He added the company’s wholesale business and internet sales were profitbale. It intends to expand this part of its business in conjunction with European partners if examinership proves successful.
Mr Dunleavy said the appointment of an independent person such as an examiner would allow negotiations on rent agreements with landlords commence. It would also ensure that vouchers, which make up a significant part of the business, would be honoured.
The examiner would also give confidence to A-Wear’s suppliers to continue to provide products to the stores, he added.
In appointing Mr Fennell, Mr Justice Charleton said there were “strong reasons” why an interim examiner should be appointed. He agreed an examiner was required to open negotiations with the landlords over rental agreements, and ensure that vouchers are honoured.
The firm’s suppliers would also need to deal with an examiner during the period of protection, the judge added. The matter was adjourned to a date later this month.