Department store chain Debenhams Retail (Ireland) Ltd is set to exit examinership after a survival plan for the business was approved by the High Court.
Under the terms of the plan the retailer’s 11 stores are to remain open and the vast majority of its staff are to be retained.
Debenhams employs around 1,400 staff in Ireland, as well as some 500 concession staff and 300 cosmetic staff.
The plan will see the company seek around 98 voluntary redundancies, but no compulsory ones.
Debenhams operates four stores in Dublin, two in Cork, and others in Galway, Limerick, Newbridge, Tralee and Waterford.
The scheme, put together by the retailer's examiner Mr Kieran Wallace of KPMG and agreed by the majority of Debenham's creditors, was formally approved by Ms Justice Caroline Costello at the High Court today.
Last May Debenhams Retail (Ireland) Ltd (DRIL) sought examinership because of consistent losses sustained since the recession in 2007, high rents, and after the withdrawal of support of its UK parent company, Debenhams Retail plc.
The company said it owed its parent €46m, which DRIL said was unsustainable.
The company will exit the examinership process on 25 August next.
The only objection to the scheme in court was brought on behalf of a woman who had brought a personal injuries claim against Debenhams. Under the terms of the scheme she would get 5% of any payment due.
Seeking the approval of the scheme Neil Steen for Mr Wallace said the scheme had been approved by the vast majority of creditors and classes of creditors. Only one class of creditors had rejected the scheme, counsel said.
While certain classes of creditors, including unsecured creditors, would only receive some 5% of what they are owed counsel said that the only alternative to the scheme was that the company go into liquidation.
In that scenario those classes of creditors would get nothing, counsel added.
Counsel said that the company had, under the scheme, secured significant cost savings that would allow it to continue to trade.
The examiner had reached arrangements with landlords concerning rent agreements with seven of Debenhams’ stores. The parent company Debenham's Retail Plc had also agreed to invest in the company by way of a loan. Meanwhile, historic debts owed by the company had been written-off.
In addition counsel said proposals put to the employees unions MANDATE and SIPTU had been accepted. 83% of the workforce had voted in favour of cost-saving proposals, counsel said.
It had also been agreed that there would, for a period, be a reduction in the price charged on good sold to Debenhams Irish companies from interconnected firms.
Supporting the application to approve the scheme Rossa Fanning said the company had not entered the examinership process lightly. It did so after incurring losses of €22.6m in the last three years.
In approving the scheme Ms Justice Costello noted that a number of cost saving measures had been agreed that would allow the company to continue to trade as a going concern.
The judge also welcomed that the vast majority of the workers would retain their jobs and that any redundancy in the company would be voluntary.
The numbers of people employed direct and indirectly by the firm was significant she said.
While she sympathised with the person who had brought a personal injuries claim against the company the judge said the reality was that all creditors in examinership suffer a significant loss.
