Esprit puts six European subsidiaries into administration
Six Esprit subsidiaries in Europe have filed for self-administration proceedings under German insolvency legislation, CEO Anders Kristiansen has announced.
The company said the move was a “proactive and forward-looking measure in order to protect the solvency and liquidity of the group” against a tough backdrop of the global coronavirus outbreak.
Kristiansen revealed that the business has been significantly affected by the crisis, which forced all European stores to close as well as nearly all points of sale across the franchise and wholesale division.
The companies have filed for protective shield proceedings, which will allow them to restructure their liabilities and long-term lease contracts, obtain funding for salaries and pension payments, and negotiate with unions for more flexible solutions.
Under German legislation, this insolvency procedure combines self administration proceedings with a protective shield, which means companies have up to three months to prepare an insolvency plan that will facilitate a reorganisation.
Esprit said the subsidiaries are currently liquid but could run out of cash in the near future as a result of the tighter measures introduced to halt the spread of the coronavirus.
“Facing the unprecedented challenge caused by the pandemic, the management is focused on optimising and streamlining the group's business in order to be stronger, leaner and fitter so as to be better placed to pursue the market opportunities that may arise after the pandemic,” it said in a statement.
Last week, Esprit issued a profit warning and slashed its guidance for the second half of 2020.
The clothing company was already struggling before the global health emergency. Last year, revenues at the firm exceeded analysts’ expectations, but fell by €300 million to €1.55 billion, while losses reached €248 million.
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