An interim examiner has been appointed by the High Court to BQ Ireland Ltd, which operates nine DIY stores in the Republic, employing 690 staff.
Two of the stores – in Athlone and Waterford – will be closed under cost-cutting proposals, with a consequent loss of jobs. Some 92 staff are employed in these two stores.
The company has 190 full-time positions and 500 part-time jobs. Its other stores are located in Cork, Galway, Liffey Valley, Limerick, Naas, Swords and Tallaght.
The company believes seven stores could be viable if rents are substantially cut and other cost-cutting measures are implemented.
It is paying some €11.6 million in rent for the stores and has been advised that this is about €5.8 million above open-market rents.
Vouchers honoured
All vouchers, credit notes and deposits will be honoured by the company throughout the examinership period, the court heard.
The petition for examinership was returned to February 12th.
Seeking the interim examiner, Rossa Fanning, for the company, said yesterday it was insolvent with liabilities of more than €17 million to its parent company, UK-based Kingfisher plc, but had no bank or revenue debts.
Its turnover had fallen 24.2 per cent from a peak of €124 million in 2009 to €94.2 million in the financial year to end January 2012.
A loss of some €20.5 million is forecast for the year ended January 2013, including restructuring costs and loss-making provisions.
Kingfisher had written to the company earlier this week saying the business was not sustainable with its current cost base and that the levels of support required by the company were no longer feasible.
Kingfisher had also indicated that it would provide financial support to the company if it was under court protection so as to enable it meet the cash flow projections in an independent accountant’s report.
Kingfisher also said it would be interested in making new investment in a restructured business of the company.
Given that letter, the directors of the company – Brian Mooney, Ratoath, Co Meath; and Diarmuid Walsh, Carlingford, Co Louth – resolved the company could not continue to trade without the support of Kingfisher and decided to recommend to Kingfisher International Finance SA that a petition be filed for examinership.
Mr Justice Peter Kelly said he was satisfied to appoint Declan McDonald of PwC as interim examiner.
Uneconomic rents
The petition for examinership told “a depressingly familiar tale” of a company “throttled” by two elements – a decline of some 32 per cent in revenues over the past four years due to the general economic malaise, plus “totally uneconomic rents” to be paid under leases providing for upward-only review entered into in better times of economic prosperity that had proved to be a “mirage”.
Speaking to The Irish Times yesterday, BQ Ireland Ltd’s chairman, Brian Mooney, said its restructuring plan involved the company getting back to break-even within two years.
“We wouldn’t go into this process without thinking this business could be viable. But some changes need to happen first,” he said.
Mr Mooney said trading over the Christmas and new year period had been “difficult”.
