An interim examiner has been appointed to Best, the company operating 13 Best Menswear stores and two other fashion stores in Ireland, employing around 135 people.
The court heard that the sudden closure of Clerys department store in Dublin last month had a "catastrophic" effect on the cash-flow of Best as it was a concession holder operating its largest store from the premises.
The damage occurred as a result of the loss of some €270,000 held by Clerys in trust for Best arising from prior sales as well as the loss of trading revenues since Clery's closed, Rossa Fanning outlined on behalf of the company.
Some €500,000 of stock was also locked into the Clerys building and could not be sold, he said.
While the company got access to the stock a week after the Clerys closure, it remains unable to use its largest store and will suffer significantly from the loss of future cash-flow from there, he said.
Best, established in 1948 and with registered offices at Finglas, Dublin, suffered over recent years due to the economic downturn and is currently unable to service its bank debt.
However an independent expert, accountant Michael McAteer of Grant Thornton, believes it has a reasonable prospect of survival once certain conditions are met, counsel said.
Those conditions include a restructuring of the company and the renegotiation or possible repudiation of leases, he said.
The company had identified problems with high rents coupled with decreasing sales since 2008 and its management had "not put their heads in the sand" but rather kept stores open by taking decisive actions, including engagement with landlords on rent, and closing stores when necessary.
The company has a significant following and a strong reputation in the Irish market, counsel added.
Ms Justice Caroline Costello said she was satisfied to grant court protection to the company and to appoint Declan McDonald of PriceWaterhouseCooper as interim examiner, pending the hearing of the petition for examinership on 30 July.
The company's main creditor is Allied Irish Banks, owed some €12.6m, while trade creditors are owed almost €12m, the court heard.
AIB was on notice of the petition and the bank hoped examinership might assist in achieving an effective restructuring of the company, the court was told.
Mr Fanning said Best is a traditional Irish trading business founded in 1948 by members of the Whelan family.
It currently operates 13 Best Menswear brand stores and two other stores, a Menswear outlet and a Denim Nation store, employing 130 people in all.
Best is part of a wider group of related stores employing a total almost 200 people in 19 stores, including several concession stores operated by other parties in Ireland and Britain, the judge heard.
Those companies are not affected by Best's application.
The directors of Best are David Jones, St Fintan's Crescent, Sutton, and John Peter Smith, South Hill, Sutton.
Through a number of nominee companies, they acquired the company in 2000 from its original owners.
Since 2001, the business of the company expanded from six stores to 37 in 2010.