Liquidators appointed to operator of Debenhams' Irish stores

Debenhams rejected an accusation by union Mandate that it had cynically used the Covid-19 situation as an excuse to shut down its Irish stores.
Liquidators appointed to operator of Debenhams' Irish stores
File image

The High Court has appointed joint provisional liquidators to the Irish arm of Debenhams.

The provisional liquidators were appointed this morning to Debenhams Retail Ireland Ltd which operated 11 stores in the Republic of Ireland.

The application came before Mr Justice Paul Coffey said he was satisfied to appoint insolvency practioners Kieran Wallace and Andrew O'Leary of KPMG as joint provisional liquidators of the company.

Last week it was announced the company was ceasing operations arising out of its UK-based parent's decision to enter administration.

Rossa Fanning SC for the the firm said it was "with great regret" that the retailer was seeking an order for its winding up, however the company was wholly insolvent and its directors had "no other option."

He said the application to seek the appointment of provisional liquidators came after the company was informed by its UK parent that it was no longer in a position to provide it with financial support.

Counsel said that the UK parent had been struggling in recent years and it had made a pretax loss of over Stg£490 for the year ending 2018.

The Irish firm owes millions of Euro to parties including revenue, the landlords of the premises they had operated from, trade creditors, other firms within the group and its employees.

Counsel said it had been making substantial losses before the Covid-19 pandemic had resulted in the stores being closed in late March.

Counsel said the Irish firm had made estimated losses in 2019 and 2018 of over €40m. The Covid-19 outbreak he said had compounded the firms difficulties by firstly resulting in a reduction of footfall in the stores, before they had all closed.

The company directly employed over 940 staff, and also provided over 500 other jobs indirectly through the 26 concession stands operated by other retail firms located in its stores.

Counsel said that following the announcement that the company, which successfully emerged from the examinership process in 2016, was to close its stores it had received correspondence from the Mandate Trade Union.

Union used 'strong words' to criticise the company

Counsel said that the union, which represents many of those employed by Debenhams, had used strong words and were critical of the company's handling of the situation and specifically its treatment of the workers.

Counsel said that while the union had quite properly raised concerns it has over the workers it had accused the company of being cruel (and of) cynically using the Covid-19 situation as an excuse to shut down the stores.

Counsel said that his client rejected that allegation, adding that the Irish stores had been losing significant amounts of money well before the current pandemic.

The crisis he said compounded the problem and left the company with no other choice other than seek the appointment of the provisional liquidators.

The appointment of liquidators counsel said, would ensure the orderly winding up of the firm, and would be in the best interests of all concerned.

Making the appointment, Mr Justice Coffey said that the evidence before the court was the company had been loss-making after it had emerged from examinership in 2016, and its difficulties had been compounded by the Covid-19 crisis.

However the judge noting concerns expressed by the Mandate trade union in relation to those who had worked at the stores, directed that the matter return before the court in two weeks time.

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