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Bad news for fashion labels as Clerys bills unlikely to be paid

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The Irish Independent understands that some suppliers were so concerned about Clerys' financial position that they had been insisting on cash-on-delivery terms.

The Irish Independent understands that some suppliers were so concerned about Clerys' financial position that they had been insisting on cash-on-delivery terms.

The Irish Independent understands that some suppliers were so concerned about Clerys' financial position that they had been insisting on cash-on-delivery terms.

MANY fashion labels which supplied Clerys are unlikely to get any of the money they were owed before the department store went into receivership last week.

The Irish Independent understands that some suppliers were so concerned about Clerys' financial position that they had been insisting on cash-on-delivery terms.

Others continued to supply the business under normal terms. These suppliers are highly unlikely to be repaid anything as they are deemed to be unsecured creditors. The failure to repay so many companies would be a hammer blow to the Irish fashion industry, which is already suffering from the retail slump and closures of smaller shops in many towns and cities.

It's likely that it will take a year before the receivership process is completed.

While many local companies are set to get nothing, the Irish Independent understands that as many as 50 concessionaires at the O'Connell Street store in Dublin had their accounts effectively settled by Clery & Co (1941) just days before the receivers were called in by directors.

Those suppliers and concessions -- which include well-known top brands such as Mango and Benetton -- will be vital to the new US owners, investment firm Gordon Brothers, in driving the department store's future fortunes.

Gordon Brothers acquired the assets and business of Clery & Co (1941) last week in a deal that saw Bank of Ireland paid about €14m of the €26m in debt that had been accumulated by the retailer over recent years.

Gordon Brothers is using a firm called OCS Operations to hold the Clerys assets it has acquired.

While many suppliers can't expect to receive money they were owed by Clery & Co (1941), it's understood that Gordon Brothers is working with suppliers to negotiate future agreements.

Heritage

Gordon Brothers has been keen to emphasise that it believes Clerys has a strong future and that it understands the position the store holds in Irish retail heritage.

Speaking to the Irish Independent last week, Gordon Brothers Europe chief executive Frank Morton said that the firm "understands the history of Clerys and respects it".

"But we also understand that it's been a challenging environment and we hope to add value to Clerys so we can deliver a more positive result than what it has been able to achieve," he said.

Clerys had been racking up losses as it suffered from the downturn.

In the year to the end of January 2010, Clerys made a €2m loss.

That compared with a €1.87m loss a year earlier. Excluding concession sales, Clerys' own net sales fell 19pc to €17.4m.

Last week, the landmark Guineys store on Dublin's Talbot Street was closed, while three Clerys furnishings outlets have also been shut.

Irish Independent