High Court confirms appointment of liquidators to Debenhams
Posted on 30th April 2020 at 22:47
Judge says evidence before the court was that Irish company had been in financial difficulties ‘for some time’
The High Court has confirmed the appointment of joint liquidators to the Irish arm of Debenhams.
Debenhams Retail Ireland had operated 11 stores in the Republic of Ireland and had employed 950 people directly. An additional 500 people had worked at the 26 concession stands operated by other retailers located in Debenhams stores.
Earlier this month it was announced the company was closing its Irish stores permanently arising out of its UK-based parent’s decision to enter administration and cease providing funding to its Irish subsidiary.
At the High Court on Thursday Mr Justice Mark Sanfey said he was satisfied to confirm the appointment insolvency practitioners Kieran Wallace and Andrew O’Leary of KPMG as joint liquidators of the company.
The liquidators had been appointed on a provisional basis by the court two weeks ago. The Judge said the evidence before the court was that the Irish company had been in financial difficulties “for some time,” and before the outbreak of the Covid-19 pandemic. It incurred losses of over €40 million in the years 2018 and 2019, and was being “propped up” by its UK parent, he said.
The “last straw” for the Irish firm came when the UK parent, which also had suffered financial difficulties and has entered administration for the second time in two years, decided to end its financial support.
This left the directors of the Irish subsidiary no alternative other than to seek the appointment of the liquidators and have the firm wound up, he said. The judge said this was regrettable, particularly as a large number of people have lost their jobs.
The Judge said he hoped the liquidators would treat the workers, and the company’s creditors “with sensitivity”. There were no objections to the application to confirm the liquidators’ appointment.
However, a small number of people supporting Debenhams staff held a peaceful protest outside the Four Courts complex on Thursday morning.
James Doherty SC, for the liquidators, told the court his clients have taken certain steps since their appointment.
In reply to the judge’s expression of concerns about the employees, Mr Doherty said the workers’ concerns were “to the forefront” of their efforts to date.
Mr Doherty said the liquidators have entered into a consultation process with the employees, the Mandate and Siptu trade unions, which represent the bulk of Debenhams staff, and the Minister for Social Protection.
He said the liquidators believe it is unlikely the business will be acquired by another party and unfortunately all the employees will be made redundant.
Rossa Fanning SC, for Debenhams, said it was “with great regret” that the retailer was seeking an order for its winding up, however the company was wholly insolvent.
Mr Fanning said it had been making substantial losses before the Covid-19 pandemic had resulted in the stores being closed in late March. The company had availed of the government scheme to help pay its workers during the Covid-19 crisis, he said.
However, the Debenhams group’s ongoing losses along with projected losses arising out of the Covid-19 pandemic had left the Irish company with no option other than to seek a winding up order, he said.
The Irish firm’s creditors include Revenue, which is owed €3.8 million, the landlords of the premises they had operated from, trade creditors, other firms within the group, and its employees.
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