The fashion retailer A-Wear, which employs 350 staff, has entered interim examinership in an attempt to force its landlords to reduce rents at its more than 30 stores around the country.
The chain, which is owned by the Lebanese-Canadian Jesta retailing group, blames its current difficulties on high rents and also increased competition and said it hopes the vast majority of the jobs can be saved. The company has been in financial difficulties since late 2011, when it was bought out of receivership by Hilco, the turnaround specialist that rescued HMV.
Hilco flipped A-Wear just four months later, however, to a consortium backed by Jesta but fronted by Manchester businessman Michael Flacks. Mr Flacks is no longer involved with the company.
Yesterday, the High Court judge Peter Charleton appointed insolvency practitioner Ken Fennell as interim examiner to Latzur, trading as A-Wear. Latzur is also involved in a separate ongoing legal dispute with Hilco, believed to have been sparked by a disagreement over the payment of invoices for trade debts.
The judge in the examinership hearing yesterday noted an independent accountant had formed the opinion the company had a reasonable prospect of survival if certain steps were taken.
This includes agreeing a scheme of arrangement with the firm’s creditors which, if approved by the High Court, would allow the company to continue to trade as a going concern. The court was told securing a reduction in the rents being paid for A-Wear outlets will be an important element.
Bernard Dunleavy, for the company, said it has traded for many years and was purchased by it current owners from receivers in 2012. While the new owners had reduced the firm’s annual loses from €5 million to €2.5 million, they had gone as far as they could in relation to a number of issues.
High rents were "a significant problem" for the company with rent at its Grafton Street store in central Dublin accounting for 28 per cent of its revenues, counsel said. Rent accounted for more than 15 per cent of revenues at 17 other stores and that was "much too high", counsel said.
A business plan had identified which stores would need to close if agreements could not be reached in relation to rents, he said. Counsel also said the company had faced increased competition from low-cost competitors in the 18-35 years ladies fashion market but steps had been taken to reposition itself in that key area.
The company's wholesale business and internet sales was profitable and it intended to expand that part of its business in conjunction with European partners in the event the examinership proves successful, counsel added. Mr Justice Charleton said there were "strong reasons" for an interim examiner to be appointed. The matter was adjourned to a date later this month.
