The High Court has appointed an interim examiner to the firm operating 15 Irish Homebase home and garden stores, which employs 558 people, including 444 working part-time.
It is anticipated that three stores — in Carlow, Castlebar, and Fonthill Rd, Clondalkin, Dublin, — may close under restructuring proposals, with the loss of 96 jobs.
Mr Justice Brian McGovern appointed Kieran Wallace of KPMG as interim examiner to Homebase House & Garden Centre Ltd, the Irish arm of the UK Home Retail Group, incorporating the Homebase and Argos brands, which has remained profitable as a whole. He returned the petition for confirmation of Mr Wallace as examiner to Jul 26.
Moving the petition on behalf of the Irish company, Rossa Fanning said it employed 558 people — of whom 114 are full-time — and had been loss-making for a number of years.
Turnover for the year to Mar 2009 was €67.6m, but that fell to €46.3m for the year to the end of Mar 2013. The company had no bank debt but had continued to trade with the help of inter-company loans.
It now owed over €30m to two companies in the wider group. Annual rental costs were €10.3m and all stores were held on foot of long-term leases.
On Friday, the UK parent group said it was withdrawing its support, without which the company was insolvent. However, the company’s petition and an independent accountant’s report identified debt restructuring and other measures were necessary if it were to have a reasonable prospect of survival as a going concern.
The company believed it has a viable future post-restructuring based on the fundamental strength of its business. Payroll costs had already been cut by 20% and the number of employees by 14%, and the company did not believe there was scope to cut those costs in stores than remained open.
However, even if rents were addressed for stores at Carlow, Castlebar, and Clondalkin, they may have to close given the extent of their losses since 2009, Mr Fanning indicated.
The parent group is prepared to allocate €2.14m to meet trading costs during the examinership period.
Meanwhile, the Hardware Association Ireland, which represents smaller businesses, said it hopes this interim examinership does not result in further job losses.
Chief executive Jim Copeland said: “The trading environment in the hardware sector has been extremely challenging over the past few years.
“While large companies are legitimately availing of examinership, we’re calling for a similar, but more affordable mechanism to be made available to independently owned, often family-run, businesses who don’t have the means to avail of the costly examinership process.”
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