The union representing workers at Arnotts will demand that a staff nominee be included on any new board of the famous Dublin department store at a crunch meeting with management this Wednesday on the company's future plans.

"It is only fair and reasonable that the staff who have contributed so much to Arnotts through the years should be allowed to protect their interests and this is best done by representation on the board," said John Douglas, general secretary of Mandate, which represents the majority of the 1,000 staff employed at the troubled store.

While the company said trading would continue as normal and that all jobs were secure, it has brought in Boston-based Palladin rescue consultants to try and restore the company's fortunes.

Douglas said staff should not be penalised because the company took its eye off its core retail activity in favour of massive expansion. He added that Arnotts is trading profitably and unlike so many others has a small surplus in its pension fund.

Last week, Arnotts announced that Anglo Irish Bank and Ulster Bank, which are owed €155m and €145m respectively by the store, had applied to take control of the iconic department store, which was established on Henry Street in 1843.

The loans to the two banks arose from the store's plans to redevelop the entire block around Arnotts.

To be known as the 'Northern Quarter' to rival the Dundrum Town Centre, the company borrowed heavily to buy up the surrounding property. But the property crash and the recession forced the company to put the €750m project on ice.

The properties purchased are now only worth a fraction of what Arnotts paid for them and last February the two banks started moves to take over the company and protect their outstanding loans.

But because Anglo is state-owned, the takeover has to be approved by the EU's competition authority as Arnotts' rivals could argue that the store was being propped up by the state.

It is understood Arnotts was keen to keep word of the banks' takeover under wraps until after the EU made its decision, but this proved impossible.

However, rivals' objections would be tempered by the realisation that if Arnotts were to close it would be a fatal blow to Henry Street, which has one of the highest footfalls of any shopping street in Europe.

The suspension of the Northern Quarter project is also likely to have ramifications for the proposed nearby development of the Carlton cinema site by Joe O'Reilly's Chartered Land, which was ultimately supposed to link up with the 'Northern Quarter'.