Court-approved survival scheme to save 130 fashion retail jobs

A survival scheme preserving 130 of 200 jobs has been approved by the High Court for the company operating Best Menswear stores, along with other fashion stores nationwide.

Best’s largest creditor, AIB, has agreed to write down more than €9m of its €13.5m debt and will continue funding the company after it exits examinership tomorrow.

Preferential and unsecured creditors will respectively get 10% and 5% of what they are owed while the remaining debt will be extinguished.

Ms Justice Caroline Costello confirmed the survival scheme after refusing to direct examiner Declan McDonald of PwC to give the Revenue Comissioners detailed information, underlying cashflow projections plus a detailed breakdown of the basis for some €289,000 fees agreed.

Those involve €170,000 for the examiner and his lawyers and €119,000 for the company’s separate lawyers and its property advisers.

Seeking that information earlier, Jennifer M O’Connell said Revenue, owed more than €700,000, wished to see the detailed information underlying the cashflow projections before deciding its position on the scheme.

There was no breakdown of work done for fees, which were substantial in the context of an €800,000 investment provided for under the scheme, she added.

Garret Byrne, counsel for Best, argued the Revenue application was unfair, unnecessary for a decision whether to approve the survival scheme and nothing more than a “box-ticking exercise”.

The information related to the cash projections was commercially sensitive, the fees were reasonable and Revenue had not suggested they were exorbitant, he said.

The necessary objective evidence was before the court for its consideration of the scheme and AIB and the vast majority of creditors had voted in favour of the scheme, counsel urged.

Rossa Fanning, for the examiner, said the Revenue’s application was wrong in law and “dangerous” because it could delay the company’s exit from examinership which it sought last July after the sudden closure of Clery’s department store had a “catastrophic” effect on its cashflow.

Best was a concession holder operating its largest store from Clery’s premises.

Mr Fanning said the Revenue has no superior entitlements over other creditors and does not have a “policeman role” among creditors.

The court’s function was to consider the scheme, as approved by creditors, and it could not “unpick” that on the basis of alleged inadequacy of information.

What the Revenue really wanted was to “second-guess” the professional fees and reallocate division of the €800,000 investment, he argued.

Refusing the Revenue application, the judge said the Companies Act requires, when deciding on a survival scheme, the court should have the “appropriate” information to decide the matter and she considered the court had that information.

The additional information sought was commercially sensitive and while she had no doubt the Revenue would keep it confidential, that was not the test.

Confirming the survival scheme, the judge said

she had “every reason to believe” the company will benefit by the existing management remaining and being involved in the investor company.

This company was properly run before it got into difficulties not of its own making but due to the economic crisis, she said.