Ill-fated move for New York store 'led to collapse of Kiely retail empire'
An expensive and ill-fated move to open a store in New York led to the collapse of the Orla Kiely retail fashion empire.
That is according to the administrators of Ms Kiely's fashion clothing business.
The collapse of Kiely Rowan with debts of £7.25m (€8.4m) in September 2018 sent shockwaves across the retail and fashion industries as the long established business was on an upward trajectory having reported increasing revenues and operating profits for 2017.
Now, the second progress report by joint administrator Chris Newell sheds light for the first time on the specific reason behind the clothing business collapsing. Ms Kiely's separate licensing business continues to expand today.
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As part of a 29-page report lodged with Companies House in the UK, Mr Newell states "part of the explanation for the failure of the business appears to be the amounts utilised to fund the business in the US entity.
"It appears that the opening of a new shop in New York created a drain on the cash flow, causing the requirement for additional borrowing which eventually led to the collapse of the whole group.
"Investigations into this matter and the actions of the directors in funding the US project to the detriment of the remainder of the group is currently ongoing."
Ms Kiely and her husband, Dermott Rowan, were the company's directors at the time of the collapse.
Mr Newell's progress report makes grim reading for creditors of the firm. He states secured creditor Metro Bank was owed £2.15m at the time of the business collapse and adds: "It is not anticipated that the secured creditor will be paid in full."
Mr Newell states that unsecured creditors were estimated to be owed £6.13m in the directors' statement of affairs and he reports that, to date, 86 claims have been received from unsecured dividends totalling £4.755m.
However, Mr Newell states: "It is not anticipated that a dividend will be paid to unsecured creditors." The report states that "Irish tax and customs" are one of the unsecured creditors and are owed £100,000.
Mr Newell states that preferential creditors relating to holiday pay and wage arrears were estimated to be £97,412 and, to date, 38 claims have been received totalling £41,398.
He added: "It is likely that there will be a dividend to preferential creditors, however the quantum and timing of the dividend will depend on the realisations and costs."