An interim examiner has been appointed to Atlantic Home Care in the Commercial Court.
Justice McGovern granted an order appointing Declan McDonald of PricewaterHouseCoopers as interim examiner to 13 Atlantic stores.
The DIY stores are owned by the Grafton Group, who bought the chain as part of the Heiton Group in 2005.
The court was told the business has been severely impacted by the recession, especially by the fall in consumer spending and in the housing sector.
The company's ability to reduce operating costs has been inhibited by the retention of "upward only" rent reviews for existing leases, a statement from Grafton said.
Atlantic accounts for 2.75% of Grafton Group's revenue and has traded at a loss since 2007. Its turnover has fallen by 44% from €100m to €56m in that period and it continues to trade at a loss in the current year.
Grafton said the rest of its DIY Division as a whole has traded ''successfully and profitably'' in a demanding retail environment but its performance has been held back by the Atlantic losses.
''These losses are no longer sustainable and a restructuring of Atlantic via the examinership is intended to bring these to an end while maximising the potential for the business to survive,'' a statement from the company said.
It added that an independent report from KPMG on Atlantic has concluded that it is possible for a sustainable and profitable business to emerge from the examinership process based on a restructuring of the company.
It said the restructuring may involve closure of at least five stores and is subject to agreement being reached with landlords on adjusting rents to current open market levels. It said these stores are significant loss makers and are forecast to make combined losses of over €3m this year.
The five are in Liffey Valley in Dublin, Pouladuff in Cork, Newbridge in Co Kildare, Childers Road in Limerick City and Wellpark in Galway. The closures would result in the loss of 38 full time and 76 part time jobs. Decisions on their future are a matter for the examiner, Grafton said today.
Grafton said that Atlantic has no bank debt and is not part of the group's financing arrangements and so the move will have no impact on financing and trading arrangements in the group and its other subsidiary companies in Ireland, the UK and Belgium.
Altantic's losses have been supported by Woodie's DIY for several years. Woodie's has indicated that it is preparted to continue supporting Atlantic during the examinership and it would also be prepared to invest in the company to facilitate a scheme of arrangement recommended by the examiner.
Under Irish law, an examinership process is designed to facilitate the survival of a company through the formulation of proposals by the examiner of a compromise scheme of arrangement.
