Fear of job losses as examiner appointed to Mothercare Ireland

An interim examiner has been appointed by the High Court to Mothercare Ireland, which employs 276 people in 18 shops across the State.

The aim of seeking court protection and examinership is to achieve a restructuring of the company, save as many jobs as possible and minimise shop closures, the company said. It cannot afford to support unprofitable stores, it added.

The firm said it will trade as normal during the examinership process, staff and suppliers will be paid as normal and all gift cards and family card points will be honoured.

Mothercare Ireland is a franchise of Mothercare UK and has traded here for 23 years. It is the country's largest maternity, baby, nursery and children's clothes retailer.

Mr Justice Brian McGovern today granted an application by Rossa Fanning BL, for Mothercare Ireland, for court protection and the appointment of Declan McDonald of PriceWaterhouseCooper as interim examiner.

The judge said he was satisfied the company, and two related companies, Mothercare World and Effleby Trading ltd, were entitled to protection and the appointment of an interim examiner and made directions for advertising the petition and returned it for hearing on July 30th

A significant source of the company’s difficulties is having to contend with rents that significantly exceed current market rents, the court was told. The company says the renegotiation and repudiation of rents will be a significant aspect of the examinership process.

Earlier, the judge queried if an interim examiner is necessary when Mothercare UK appeared to be the main supplier.

Mr Fanning said there are a number of other suppliers and having an interim examiner aids consumer confidence and communication with landlords. Having an interim examiner does not particularly increase the costs of examinership, he added.

The company was seeking a very short return date for the hearing of the petition which would also reduce costs, he said.

Counsel said Mothercare Ireland is a franchisee of Mothercare UK and is not a subsidiary of the latter or part of the same corporate group. It has debt obligations to Mothercare UK and has had to negotiate an extension of credit terms, he said.

Mothercare Ireland grew very rapidly during the boom, counsel said. It had four stores in 1993 and in 2011 that number had increased to 24 shops. While the business had been affected by the downturn, it is still a €33million a year trading business with 276 employees.

Counsel said there were numerous reasons for the company’s insolvency including that its target audience is young families who have been particularly hit by the recession with a consequent fall off in spending from that group. The company was also affected by discount stores selling baby and maternity wear.

High rents were a major factor and leased with high rents were entered into mainly with upward only rent increase clauses at the height of the boom, he outlined.