The retailer’s difficulties have put 11 Irish shops into examinership after the failure of rent negotiations with its landlords.
The crux of these difficulties lies in rents set during boom years on upward-only leases. The examiner is expected to seek talks with its landlords to get a reduction in Debenhams’ annual rent bill of €25m.
Kieran Wallace of KPMG has been appointed by the High Court as interim examiner to Debenhams (Ireland), following an application from the company for court protection.
The retailer has reassured staff and customers at its stores that it was “business as usual” during the period of court protection. It told the court, however, that the alternative to examinership is liquidation with a deficit of €264m.
The High Court has the power to repudiate leases if agreement with landlords cannot be reached. An agreement with the Roche family will be critical to the success of the examinership. Debenhams acquired nine of its 11 stores in 2006 from the Roche family, and converted those Roches Stores outlets.
Debenhams already operated from Mahon Point in Cork and Newbridge on leases signed before the deal with the Roches, while the Roche family last year sold the Frascati shopping centre in Blackrock to Invesco, which became Debenhams’ landlord there. The landlords at its stores in Blanchardstown and Tallaght are likely to be the developers of those shopping centres.