The high-profile collapse of Debenhams in Ireland into liquidation may be just the beginning. Another 2,000 jobs are gone with the withdrawal from the Irish market of a retail business that could trace its presence here all the way back to Roches Stores. Retailers are in real trouble. It isn't just about holding on to staff or availing of Government supports to ensure employees have a reasonable income during the lockdown.
There is a huge rent crisis building, especially among retailers. April 1 was the day that second-quarter commercial rents were due to be paid in advance. According to a letter from Retail Excellence Ireland to Finance Minister Paschal Donohoe, just 20pc of commercial rent has been received.
Landlords are not getting their money because tenants don't have it. The representative body is so alarmed by what it is seeing in the sector that it consulted with the chief executives of AIB and Bank of Ireland in recent days, warning them to be prepared for the coming commercial rent crisis.
Debts are building among the whole business sector. At any one point in time, firms owe each other money as part of the normal course of business. Many of those bills, when it comes to retail, are most likely not being paid.
In its letter to Donohoe, Retail Excellence Ireland put forward what it believes is a possible shared solution to the crisis. It proposes that the Government create a commercial lease grant fund equivalent to 60pc of loss-making commercial lease rent and service charge costs over the period of the emergency.
It proposes a 60/20/20 split, in which the State puts in 60pc of the rent, the landlord accepts a hit of 20pc on what is due and the tenant pays 20pc, with a payment plan in place to assist the tenant.
Critics might argue as to why retailers should end up paying only 20pc of their rent. However, this is as much about what they can pay, as about what they should pay. Many businesses are closed with zero revenue, but rent is due to be paid during this crisis.
There is no point in protecting the relationship between the retail workers and the shops they work in if the shops have to shut down because they cannot pay their rent.
You only have to look at what other governments have done. In the UK, the government has introduced emergency legislation to enact a moratorium on commercial landlord sanctions and debt enforcements for at least three months. So if a retailer, for example, cannot pay their rent because of the cash-flow problems caused by Covid-19, they will be protected from eviction.
In France, there is a new law establishing the principles of rent deferral within the framework of commercial leases for micro-enterprises.
In Singapore, restaurants and other commercial tenants, unable to pay rent because of the virus, can hold off on their contractual obligations for at least six months.
In Australia, there is a six-month moratorium on eviction for non-payment of rent for businesses severely affected by the virus.
Debenhams had its own problems in the market before the crisis. The Irish operation had come out of examinership a few years ago. But without some kind of framework and financial package for commercial tenants, there will be chaos. Landlords will end up pursuing shut businesses through the courts for back rent at a time when companies have no income.
There was a similar issue in the last recession. Back then, some landlords insisted on what they were owed and retail outlets simply shut for good. In other cases, individual arrangements were reached as landlords took a more realistic approach. This crisis is different.
It is more sudden, more widespread, and it is vital there are businesses capable of reopening when the virus does come under control. The Government needs to act on this issue quickly.
Lufthansa awaits turbulence
Sometimes there is nothing like the smell of a government bailout to get big companies to say what is really going on. Take Lufthansa, which is looking for financial assistance from the German government.
Its chief executive said during the week the firm was losing €1m per hour. Having grounded almost all of its fleet of 736 planes, the group plans to permanently remove some of its largest aircraft from service and reduce capacity for the long term. Over 100 of its planes are on lease. There is no quick recovery coming, according to Lufthansa, which estimates that it will take several years before airline passenger demand reaches pre-virus levels.
If accurate, it spells terrible news in Ireland, and not just for its airline industry. Our tourism industry, which attracted a record 10.6 million visitors last year, will be a long time rebuilding. It would also spell bad news for the Dublin Airport Authority. The DAA got plenty of stick for opening terminal two during the recession, with passenger levels well below capacity.
The success of the economic turnaround, and the airport's tenacity in positioning itself as a long-haul transatlantic hub, paid dividends and the airport has handled record numbers in recent years. Before the virus hit, talk about a third terminal was back on the cards.
The other great cross-fire casualty of a prolonged airline downturn would be the aviation-leasing business, where Ireland is a major global player. In this industry, aircraft leases can be 'wet', 'dry' or 'moist', depending on exactly what the lessor provides. I suspect 'runny' is the more appropriate term among normally well-heeled aviation-leasing executives panicking about what is happening.
Airlines will be talking to leasing companies about why they cannot pay the full leases on planes that are grounded. Leasing companies will be trying to come to terms with a drying up of business from airlines which have no intention of expanding in the coming years.
The founder of EasyJet has warned he will sue executives at the airline if they spend a "penny" on a £4.5bn (€5.1bn) order for new planes. Stelios Haji-Ioannou said going ahead with the Airbus deal could result in EasyJet failing to repay £600m in UK government loans on time - and described the purchase as "a misuse of taxpayers' money".
The ramifications for aviation lessors could be substantial. In 1990, just 15pc of the world's passenger airline fleet was leased. Now it is over 40pc.
Echoes of the Great Depression
The IMF spooked everybody on Thursday by saying the global economy was facing its biggest drop since the Great Depression, which began in 1929. The good news is that the IMF hasn't said it will be as bad as the Great Depression, just worse than everything that has happened since. Thank heavens for small mercies.
How bad was the Great Depression? Well, it began with the stock market crash on Wall Street in 1929 and didn't really end in some countries until the beginning of World War II.
Agricultural food prices collapsed by 60pc in the US. Worldwide GDP fell by an estimated 15pc between 1929 and 1932, compared to just 1pc for the last financial crash in 2008-09.
International trade fell by more than 50pc as countries turned to protectionism. There are more trade deals and single market certainties in global trade now, but we have already seen how even at the centre of the European single market, national interests have trumped EU ones.
It seems the Great Depression was made a lot worse by the decision of nation states to close ranks and stifle trade. As the eurozone leaders bicker over who should shoulder the cost of the crisis, thereby threatening the project's very future, resonances of the past start to return.
Sunday Indo Business