Debenhams Retail Ltd has a 'reasonable prospect of survival'

The appointment of an examiner to the department store chain, Debenhams Retail (Ireland) Ltd, has been confirmed by the High Court.

Some 1,400 staff are directly employed, while 500 concession staff and 300 cosmetic staff also work in the 11 stores nationwide.

Earlier this month, Debenhams Retail (Ireland) Ltd (DRIL) sought examinership, because of consistent losses sustained since the recession, in 2007, and after the withdrawal of support by UK parent company, Debenhams Retail plc.

Kieran Wallace, of KPMG, was appointed interim examiner, after the court was informed the company had a reasonable prospect of survival, if certain steps were met.

The conditions include court protection and the approval of a survival scheme with the company’s creditors.

That would involve reducing costs, including rent, which the company says is well above market rates.

The company, represented by Rossa Fanning, BL, said it had incurred losses of €22.6m in the last three years. While revenues increased in 2015 and 2014, it continues to be loss-making in the current year.

The matter was returned before Mr Justice Brian McGovern, yesterday, who confirmed Mr Wallace as examiner.

Mr Wallace now has up to 100 days to put together a scheme of arrangement with creditors, which, if approved by the High Court, will allow the company to continue to trade as a going concern.

There were no objections to the application.

However, lawyers for Dooroy Ltd, the landlords of DRIL’s stores in Henry Street, in Dublin, and Patrick Street, in Cork, expressed some concerns about the examinership.

John Gleeson, SC, for Dooroy Ltd, said while it was not objecting to the examinership, it was their case that the DRIL’s parent must be involved in the process. It was the parent’s decision to withdraw support that caused the company “to collapse”, counsel said.

Counsel said his client said the UK parent had been “calling the shots” in negotiations it had about the stores and it could not stand outside the examinership process.

Counsel added Dooroy Ltd disputes suggestions made by DRIL that negotiations the parties had concerning rents had been unsuccessful.

James Doherty, SC, for the examiner, said that, based on the information he has collated to date, Mr Wallace agrees with the independent experts view that the company does have a reasonable prospect of survival.