Orla Kiely failure was caused by US move say administrators
today Oct 29, 2019
The failure of Oral Kiely’s business in September 2018 came as something of a shock and it has now emerged that its over-ambitious expansion into the US was its main problem.
The Kiely Rowan plc company had debts of €8.4 million/£7.25 million, including spending linked to its New York City store opening, its administrators said.
The company had previously seemed to be on a clear path to growth with revenue and profits both having risen in 2017.
Joint administrator Chris Newell said the clothing business was hampered by that expensive US expansion, even though Kiely’s separate licensing business continued to expand.
Newell said in a document filed at Companies house that “part of the explanation for the failure of the business appears to be the amounts utilised to fund the business in the US entity.”
The NYC opening “created a drain on the cash flow, causing the requirement for additional borrowing which eventually led to the collapse of the whole group,” we’re told.
And he added that "investigations into this matter and the actions of the directors in funding the US project to the detriment of the remainder of the group [are] currently ongoing”. Those directors were Kiely herself and her husband Dermott Rowan.
The report makes grim reading for creditors who were owed millions. Secured creditor Metro Bank was owed £2.15 million and is unlikely to be paid in full, which means unsecured creditors are in an even worse position. Newell said “it is not anticipated that a dividend will be paid to unsecured creditors”.
Preferential creditors, those owed wages and holiday pay, will get something but it’s unclear how much.
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