Debenhams stores in Ireland are set to remain open following the approval of a survival plan allowing the department store chain to exit examinership.
Under the terms of the plan, which has been approved by the High Court, the retailer’s 11 stores are to remain open and the vast majority of the company’s 1,400 directly employed staff, some 500 concession staff, and 300 cosmetic staff are to be retained.
There will be 98 voluntary redundancies, but no compulsory ones. The company operates four stores in Dublin, two in Cork and others in Galway, Limerick, Newbridge, Tralee, and Waterford.
The scheme, put together by the retailer’s examiner Kieran Wallace of KPMG and agreed by the majority of Debenhams’ creditors, was formally approved by Ms Justice Caroline Costello at the High Court on Friday.
Last May, Debenhams Retail (Ireland) Ltd (DRIL) sought examinership because of consistent losses sustained since the recession in 2007, high rents, and after the withdrawal of support of its UK parent company, Debenhams Retail Plc.
The company said it owed its parent €46m, which DRIL said was unsustainable.
The company will exit the examinership process on Thursday.
The only objection to the scheme in court was brought on behalf of a woman who had brought a personal injuries claim against Debenhams. Under the terms of the scheme, she would get 5% of any payment due.
Neil Steen, counsel for Mr Wallace, said the scheme had been approved by the vast majority of creditors and classes of creditors. Only one class of creditors had rejected the scheme, he said.
While certain classes of creditors, including unsecured creditors, would only receive some 5% of what they are owed, counsel said the only alternative was that the company go into liquidation.
In that scenario, those classes of creditors would get nothing, counsel added.
He said the company had under the scheme secured significant cost savings that would allow the company to continue to trade. The examiner reached an arrangement concerning rent agreement Debenhams had with landlords of seven of its stores.
The parent firm Debenhams Retail Plc had also agreed to invest in the company by way of a loan. Historic debts owed by the company had been written off.
In addition, counsel said proposals put to the employees unions, Mandate and Siptu, had been accepted.
In all, 83% of the workforce had voted in favour of cost-saving proposals, he said. It had also been agreed that there would, for a period, be a reduction in the price charged on goods sold to Debenhams Irish companies from interconnected firms.
Supporting the application to approve the scheme, counsel Rossa Fanning said the company had not entered the examinership process lightly. It did so after incurring losses of €22.6m in the last three years.
Ms Justice Costello, in approving the scheme, noted that under the scheme, that a number of cost-saving measures had been agreed that would allow the company to continue to trade as a going concern.