The Karen Millen ladies fashion chain and two associated companies, employing 300, have been given High Court protection to allow them try to trade out their financial difficulties.
Ms Justice Marie Baker appointed Declan McDonald of PWC as interim examiner to Karen Millen Irl Ltd, Warehouse Fashion Irl Ltd, and Coast Stores Irl Ltd following petitions presented by Rossa Fanning BL on behalf of the companies.
The court heard the companies have a reasonable prospect of survival if a number of conditions are met including renegotiation of rents and the closure of uneconomic stores.
The Karen Millen stores, which employ 65 people, trade from nine locations around the country and are either “standalone” stores or are operated as concessions within the Brown Thomas chain.
Warehouse Fashions operates from 16 locations, employing 106, also from standalone and concession stores while Coast, employing 129, also operates from 16 locations including concessions in chains like Debenhams, Arnotts, and House of Fraser.
The companies say they traded profitably until the downturn in 2008 but difficulties continued as the economy declined with sales decreasing and onerous leases on premises in place.
The brands have significantly under-performed in some of its retail stores whilst the concessions stores have performed. This is due to the concession rents being linked to turnover and to the changing shopping habits, particularly in the occasion-wear market, the petitions state.
Warehouse Fashion has incurred losses of €200,000 for the first seven months of this year. For two years up to March last, Coast has had losses totalling €1.8m.
Karen Millen had an asset deficiency as of September 30 last of €2.1m and is only continuing to trade because of the forbearance of other companies within the corporate structure.
All three companies have attempted to restructure property and payroll costs.
All three have no secured or bank creditors but all are in debt to inter-group creditors for sums of between €3.1m and €7.7m.
The directors of the companies are satisfied that with changes to the operation of the businesses, they can as a whole trade profitably in 2015 and subsequent years.
Ms Justice Baker ordered the cases return to court in three weeks.
© Irish Examiner Ltd. All rights reserved