The High Court has appointed joint provisional liquidators to four Irish operating companies that are part of the UK high street fashion group Arcadia.
The companies, including Topshop/Topman Ireland, between them employ 487 people in 14 stores in the Republic and also have concession stands in various premises.
It is hoped to procure the sale of the Irish operations as part of an overall sale of the Arcadia group and the intent is the Irish stores will continue to trade under the provisional liquidators through Christmas to maximise the value of winter fashion stock, the court was told.
The application for the appointment came on Monday night, on the heels of the appointment of provisional administrators to the Arcadia Group (AGL) in the UK.
AGL owns the Topshop, Topman, Dorothy Perkins, Wallis Retail Ireland Ltd, Miss Selfridge, Evans, Burton and Outfit brands, trading from over 500 stores in the UK employing more than 13,000.
The court was told by John Lavelle BL, instructed by Artur Cox solicitors, the Irish companies rely entirely on AGL for them to trade and cannot operate independently of the Arcadia group as a whole.
UK entities own the relevant brands and intellectual property rights, operate the online platforms and own the leasehold interests in the premises used by the Irish companies, the court heard.
At a late-night sitting, Mr Justice Michael Quinn granted the application to appoint Ken Fennell and James Anderson of Deloitte as joint provisional liquidators.
The companies are Arcadia Group Multiples Ireland Ltd, Topshop/Topman Ireland Ltd, Wallis Retail Ireland and Miss Selfridge Retail Ireland.
The judge was told the companies are unable to pay their debts for reasons including the insolvency of the Arcadia group as a whole.
The companies had encountered difficulties prior to this year for reasons including the shift to online sales and increased competition and those difficulties were compounded by the Covid 19 pandemic.
The impact on the Irish operations of Arcadia was “particularly severe” with the Irish stores, which were closed for 23 weeks, seeing revenues plummet by up to 60 per cent, counsel said.
Because online sales were carried out through UK entities, the Irish companies did not generate any income from those sales and all four companies made losses in the financial year to end August 2020.
The main assets of the companies are sums due from other undertakings in the Arcadia group but, because there is an insolvency process underway, the likelihood of realising those inter-group debts is limited, counsel outlined.
The companies also dispute the extent of a demand received from pension scheme trustees, the court was told.
Mr Justice Quinn said he was satisfied to appoint the joint provisional liquidators and returned the petition to December 21st.
It was said the provisional liquidators appointment would facilitate the disposal of the Irish assets and potentially preserve employment, the judge noted.
A “particular feature” of this application is the hope a transaction in the UK will preserve the business and the jobs but, if that does not occur, the operation of the stores during the winter months would be a better option for employees and creditors, he said.
The appointment would facilitate the stores here reopening on Tuesday, he added.
Fears had previously been raised about the future of Arcadia, which is owned by businessman Philip Green, after its sales have been hammered by the Covid-19 pandemic and after reports it could seek to go into administration in Britain.
Its national coordinator Jonathan Hogan told theit has asked Arcadia to keep staff fully informed but said that there had been no communication as of early Monday evening.
The union was "aghast" at the possibility that Arcadia could do what Debenhams did at the start of the Covid-19 crisis this year, Mr Hogan said.
The struggling group turned down rival Frasers Group’s offer of a “lifeline” loan of up to £50m (€55.6m), sportswear retailer Frasers, controlled by Mike Ashley, said on Monday.
Arcadia said on last week that it was working on a number of “contingency options” to secure the future of its stores.
“Frasers Group were not given any reasons for the rejection (of the loan) nor did Frasers Group have any engagement from Arcadia before the loan was declined,” Frasers said.
Earlier on Monday, Frasers said that, should Arcadia Group enter into administration, it would be interested in participating in any sale process.
Media reports have also identified retailers Marks & Spencer, Next, and Boohoo, as well as private-equity players, as potential bidders for individual brands.
• Additional reporting Reuters