Fashion retailer New Look's application for examinership in Ireland is "not about saving jobs" but an attempt to rewrite its contracts with landlords, it has been claimed.
A lawyer for some of the landlords told the High Court the company was in "more robust health than most", despite the Covid-19 pandemic, and was seeking to make changes that could save it around €5 million per year in rent reductions.
New Look has asked the court to confirm the appointment of an examiner, saying that while it has cash to pay its debts today, it expects to be insolvent by March.
Last month, the court appointed Ken Fennell, of Deloitte as interim examiner to the chain's Irish arm, which operates 27 stores and employs 475 people in Ireland.
New Look sought the protection of the courts due to financial difficulties and losses from the pandemic. On Tuesday, Kelley Smith, for New Look, told the court the company was in an “unprecedented situation” where stores had been closed for three months, then reopened in a very different trading situation.
The landlords were asking the company to continue to pay the landlords “until it reaches the precipice and then falls over”, she said.
On March 17th, three days before the stores closed, New Look asked for a three-month rental holiday and no landlord agreed to that, Ms Smith said.
The landlords accepted the company was in financial difficulty and had “moved position” to state they would forgive rent for April, May and June, but that had “strings attached”, she said.
“This is only a temporary breathing space we are looking for,” Ms Smith said, adding that the company had said it would pay its arrears during examinership and had paid rent in full since August 28th.
Ms Smith said there was no evidence of a “strategy” by the company and rejected any suggestion of “bad faith or improper purpose” to the application.
“The landlords want us to continue to pay... without sight of the train coming down the track,” she said. “They want us to continue trading and to run out of cash until we get to a place where we are on the precipice.”
The court heard submissions on behalf of the landlords which described the application as “audacious, opportunistic, cynical and contrived”.
Rossa Fanning SC, for the three opposing landlords, said “substantial arrears” had built up in relation to their four stores.
These were €365,185 for the Liffey Valley store; €169.031 at Navan Town Centre; €92,361 at Fairgreen, Mullingar, Co Westmeath and €56,901 at Castlewest Shopping Centre, Ballincollig, Co Cork.
The examinership was “not about saving jobs, it’s about reducing the obligation to landlords to improve profitability”, for the company, he said.
The objective was the “long-term writedown of obligations under leases, saving €5 million year-in, year-out, long after the pandemic,” Mr Fanning said.
He argued the rent holiday request had been premature on March 17th. The petition for examinership was a “brazen and obvious” attempt to replicate the benefits from a company voluntary arrangement undertaken by the parent company in England, he said.
It was not credible that the company which had €15.6 million in cash reserves last month would go into liquidation if examinership was refused, and it had “deliberately sought to exaggerate its insolvency”.
An estimate for a drop in sales was “just a prediction”. The court’s decision had to be based on evidence and the evidence was “flimsy and speculative”, he said.
The hearing continues on Wednesday before Mr Justice Denis McDonald.
