The High Court has appointed an examiner to O'Brien's Irish Sandwich Bars, which employs 20 people directly and 800 indirectly in 85 franchised outlets in Ireland.
The company has a total of 220 outlets in 13 countries worldwide.
The court was told an unspecified number of the 85 stores in Ireland are to be closed be closed as part of proposals aimed at ensuring the survival of the company, which is insolvent with debts of more than €4 million, including €3.4 million owed to Bank of Ireland.
An independent accountant believed the company needed ‘surgery’ and, provided that was done, it has a reasonable prospect of survival as a going concern, Rossa Fanning, for the directors, said.
The company offered a fundamentally good product and had a sound business model but issues related to under-performing stores and rents would have to be addressed.
Counsel said the survival conditions include new rental agreements for the franchised outlets as the company had directly entered into leases and was now facing the costs of honouring lease arrangements for some ten outlets which were closed and others which are under performing due to the difficult economic climate.
The company was involved in negotiations and did not, for commercial reasons, want to disclose the number of outlets which it was proposing to close.
He added one creditor, Lindat Ltd, had secured judgment for some €102,000 against the company and had served notice of its intention to bring winding up proceedings. The company could not pay that sum and it was against that unhappy background it was seeking court protection.
Having read the director's petition for examinership, the affidavits and the independent accountant's report, Mr Justice Brian McGovern said he was satisfied to appoint Paul McCann of Grant Thornton as interim examiner and returned the matter to July 22 next.
In a statement released this evening, O'Briens said that the examinership involves the company's head office and does not affect the 85 or so franchise outlets in this country.
The company's chairman, Brody Sweeney, said: 'We are taking this action in an effort to restructure the business for the benefit of our franchisees, and to protect jobs.
'It's business as usual for our stores and franchisees, who themselves are not subject to examinership,' he added.
O'Briens said it expected that most of the stores will stay open, but their survival is dependent on compromise from landlords on rent.
'Our decision is ultimately caused by the collapse in property values,' said Mr Sweeney.
'We have had to close a number of stores as some landlords remain intransigent, and refuse to reduce rents, and some of our franchisees have been struggling to pay their rents for the same reason.
'The vast majority of our franchisees have remained supportive, for which we thank them.'
