Esprit has requested, and obtained, protection against creditors for its German branch. The fashion retailer is particularly concerned about liquidity problems, as sales have plummeted as a result of the corona crisis.
Esprit applied for creditor protection for six German subsidiaries at the end of last week. The company's shares, which are listed on the Hong Kong Stock Exchange, have been suspended from trading. Two weeks ago, the fashion brand already warned of large losses as a result of the corona crisis: all of the chain's European stores are currently closed because of protective measures against Covid-19, causing sales to decimate.
As the protective shielding procedure has been set in motion, the retailer now aims to restructure under self-administration. Esprit said the move was necessary because the group currently still has sufficient liquidity, but its future liquidity was threatened as a result of the corona pandemic.
Elsewhere in Europe too?
"Since the announcement, the position of the group's European companies has further deteriorated significantly, currently generating only weak online sales, while salaries, rents and operating costs are still rising", the German branch explains in a press statement. It talks about a "proactive and forward-looking measure to protect the group's solvency and liquidity".
A trustee has been appointed as supervisor and an insolvency plan is to be submitted by 29 June. The company plans to continue working on the restructuring plan it launched back in 2018. Esprit also says it is working relentlessly to safeguard all other European subsidiaries and ensure that they will be able to move forward as soon as public life returns.