Homebase Ireland’s exit from examinership was approved by the courts today, saving 500 jobs at the DIY retailer.
Thirteen of the company’s 15 Irish stores will remain open. Just two, its branches at Carlow and Castlebar, have closed – with a loss of 50 jobs. When it first entered examinership, Homebase House and Garden Centre Limited said it would also probably have to close its Fonthill store in Dublin, but this was avoided.
A spokesperson previously said that any workers who were made redundant would have the option to transfer to Argos, which is also owned by the company’s UK parent Home Retail Group.
Kieran Wallace of accountancy firm KPMG was appointed by the High Court as its interim examiner in July after Home Retail Group withdrew financial support.
The High Court in Dublin approved the company’s restructuring plan, or Scheme of Arrangement, after none of its creditors objected to it – though two abstained from voting.
The arrangement reached included a renegotiation of expensive commercial leases signed with landlords during the boom. The company previously said it could not reduce operating costs because of upward-only rent reviews on its store leases, calling the situation unsustainable.
These upward-only rents, coupled with a reduction in disposable income among shoppers and a fall in house-building in the aftermath of the financial crisis, saw Homebase Ireland record a loss every year for the past five.
Its turnover for the year to end March 2006 was some €67.6m but that fell to some €46.3m for the year to end March 2013.
Rossa Fanning, counsel for Homebase, told the High Court in July that Homebase Ireland’s annual rent bill of €10.3m was around 50pc greater than “open market rent”.
Retail Ireland has said that the company’s difficulties were “a clear and unequivocal indication” that upward-only rents were placing huge pressure on “otherwise sustainable” retail businesses.
The chain’s main competitors, B&Q and Atlantic Homecare, have both used examinership in recent months to force rent cuts.
The exit from examinership will formally take place on October 25.
All ordered products, pre-payments, credit notes and vouchers will be fully honoured.
The Homebase outlets still operating include stores in Limerick, Sligo, Waterford, Drogheda, Longford, Letterkenny, Killarney, Portlaoise and Navan, as well as four in Dublin.
Most of the staff working at these stores are employed on part-time contracts.