The Orla Kiely fashion retail empire went out of business with debts of more than £7.25m (€8.1m), new documentation shows.
That is according to the Joint Administrators of the collapsed retail business who anticipate that unsecured creditors owed £5m will be left empty-handed from the administration.
The Administrators, Chris Newell and Simon Bonney, estimated that the total deficiency from the business amounts to £7.5m (€8.1m).
Ms Kiely’s fashion empire had been helped in no small way by the Duchess of Cambridge, Kate Middleton who has worn her distinctive print coats on a number of occasions.
Other celebrity fans of the Orla Kiely brand included ‘Girls’ creator, author and actor Lena Dunham and actors Keira Knightley, Kirsten Dunst and Zooey Deschanel.
However, in September, the announcement that Ms Kiely’s retail business had shut-down with the loss of 48 jobs here and in the UK sent shockwaves across the fashion and retail worlds.
The most recent accounts for the 12 months to the end of March 2017 showed that the business had recorded earnings of £322,551 (€360,950) as revenues climbed by 16% to £8.3m (€9.2m).
Now, a 60-page report by the Administrators, including appendices, lodged with Companies House in the UK, sheds some light on how the fashion retail empire collapsed.
In the report, the Administrators stated that from 2000, the business traded profitably with many years of success with a strong brand.
They said that “the company began to experience difficulties and as a result, the profitability of the business began to suffer. This is in part due to the downturn in the fortunes of retail customers in the current trading conditions.”
The Administrators also reveals that a new Finance Director was appointed to the firm in July 2018 “following which a number of issues were highlighted with the company’s finances”.
The Administrators said that as a result of the company’s financial difficulties and the issues highlighted by the new Finance Director, the directors, Orla Kiely and her husband, Dermott Rowan sought advice from an alternate insolvency practitioner who advised that the business to be closed down and the company to be placed into creditors’ voluntary liquidation.
The Administrators stated that upon receipt of the notice to place the company into creditors’ voluntary liquidation in September, the company’s largest creditor, Metro Bank plc which has fixed and floating charges over the firm’s assets placed the company into administration.
The Administrators said that due to a lack of working capital and the cessation of trading prior to their appointment, they did not consider it possible to restructure the existing business.
The Administrators states that they don’t believe that the ordinary, unsecured creditors will receive a dividend.
The Joint Administrators state that there will be sufficient funding to pay a distribution to preferential creditors only. The documents state that 70p will be paid for every £1 (€1.12) owed to preferential creditors.
In their report dated November 14th, the Administrators stated that Ms Kiely and Mr Rowan have not to date submitted a signed Statement of Affairs but they are currently in the process of drafting this and the forms are expected to be received shortly.
Metro Bank plc is owed £2.2m (€2.5m) by the company through fixed and floating charges and the Administrators that the dividend to be paid to the secured creditor on its fixed charge is “to be confirmed”.
This is dependent on how much will be realised from the sale of ‘Goodwill’ or intellectual property rights attached to the Orla Kiely brand held personally by the company directors, Ms Kiely and Mr Rowan.
The administrators state: “Any opportunity to agree a deal to sell any goodwill held, will require the co-operation of the directors. The expected to realise amount for goodwill is therefore uncertain.”
The Administrators said that the anticipated dividend on the bank’s floating charge is ‘nil’.
The list of unsecured creditors shows that £2m (€2.2m) is owed to 'trade and expense creditors' with £1m owed to Ms Kiely and Mr Rowan.
In addition, the Revenue Commissioners here are owed an estimated £100,000 (€111,905) and the UK Revenue owed £567,702 (€635,287).
The estimated amount owed to the employee and former employees, labelled a Special Creditor Group, is £315,243 (€352,773).