A company operating a number of well known clothing stores in Ireland has been refused permission by the High Court to repudiate leases on four of its outlets as part of a proposed survival scheme.
An examiner was appointed to Bestseller Retail Ireland Limited in February to draw up the survival plan after it announced it was closing 14 of its 36 stores.
Bestseller, a wholly owned subsidiary of Danish company Bestseller A/S, has been operating in Ireland since 1991 and sells clothes and accessories under the brand names Vero Moda, Jack and Jones, Only and Name It.
The Irish subsidiary this week asked the High Court for permission to repudiate leases on a number of stores as part of a scheme of survival proposed by the examiner which hopes to retain 150 jobs.
The court heard the proposed repudiation related to loss-making stores but excluded unprofitable units for which guarantees had been given by the Danish parent company.
Mr Justice Brian McGovern today refused the Irish company’s application to repudiate leases related to its Navan, Dundalk, Tralee and Sligo stores.
No repudiation of leases had been sought where guarantees were given by the parent company and this appeared to be objectively unfair, nor had any reasonable explanation been given for difference of treatment between stores, the judge said.
The repudiation of a lease under the Companies Act 1990 was a significant interference in the property rights of a landlord and must not be exercised lightly, he said.
It seemed to him the dominant motive for exclusion of certain stores from non-repudiation of leases was to protect the interest of the shareholder which is the parent company. It was not the purpose of an examinership to protect the investment of shareholders where that investment has been unsuccessful, he said.
The judge said he did not believe this was the end of the examinership and it was open to the examiner to go back and negotiate with all landlords involved.
Landlords for the four stores had objected to the repudiation argued the criteria being used to select those stores where leases would not be repudiated was inconsistent and lacked transparency.
The company said its parent company was prepared to guarantee certain stores but not others. If this was not accepted, there was a chance all the stores would be closed down, the company claimed.
The case was adjourned until next week to allow lawyers consider the effect of the judge’s order.