A-Wear bought out of receivership

The business was placed into receivership by the retail restructuring firm and immediately bought by investment firm Jesta Group, saving 450 jobs.

Hilco Ireland acquired the business in October after previous owners Alchemy Partners, concluded that continued funding of escalating losses was no longer viable.

Hilco said the business is now capable of “sustainable profitability”.

The retailer had previously been the subject of a highly-leveraged buyout which resulted in an unsustainable debt burden in excess of €70m. A-Wear had become substantially loss-making with its latest accounts showing total losses in excess of €18m.

Since its acquisition by Hilco, the company has implemented a series of restructuring activities including a reduction in head office support staff as well as the negotiation of substantially improved rental terms with the vast majority of its landlords and the closure of the loss-making UK business.

Hilco has provided over €3m of additional working capital to the business including almost €600,000 in the last week to ensure employee salaries could be paid today.

Hilco Group chief executive Paul McGowan said: “Although sales levels at A-Wear had fallen by more than 55% since the financial crisis began in 2008, rental levels actually increased for the business as Ireland rose to the peak of the property bubble. Rental levels across the country are simply extortionate for the new retail reality.

“Landlords are either unable or unwilling in many cases to implement reductions that would preserve a diverse retail environment in the Irish market. This is a situation which is now prevalent in the sector and I am aware that a number of international retailers are reviewing their exposure to Irish retail as a result.

He added: “Although we have found landlords, including NAMA-borrowers, to be extremely helpful to A-Wear as an indigenous retail chain, I fear that the recent pronouncements from NAMA and the finance department do not go far enough to prevent a wholesale departure of quality, international retail from the Irish market.”

A-Wear said it has paid a significant proportion of its historic liabilities to both landlords and the revenue since being acquired by Hilco with over €3m in payroll and VAT having been paid in that period including the arrears of over €1.5m which were overdue at the date of acquisition.