Dutch fashion label Scotch & Soda has filed for bankruptcy for its domestic stores. Owner Sun Capital cites “serious cash flow problems” as the reason. The chain is also looking for a buyer for its 200 shops outside of the Netherlands, even though they are not directly affected by the bankruptcy.
Investment fund Sun Capital bought the chain in 2011 and bet on strong international expansion, but now seems not to have kept enough cash at hand to survive not one, but two global crises. The Covid lockdowns hit the chain hard, the cost-of-living crisis appears to have given it the final push. Sun Capital had to supply the chain with 55 million euros last financial year to stem the bleeding, Dutch newspaper FD reports.
Earlier this month, the investor’s efforts to sell the Dutch fashion chain were leaked, but they did not generate results in time. These are not the first sale attempts, according to FD, but the attempts in 2013 and 2018 also came to nothing.
Wait and see
Scotch & Soda has 230 shops worldwide: the vast majority of them are not directly involved in this bankruptcy. However, they appointed trustee for the Dutch branch has said that the efforts to find a buyer for the non-bankrupt stores is also urgent, as “the foreign stores need the Dutch branch in order to be able to operate properly.” A further capital injection is also necessary, Dutch newspaper Algemeen Dagblad reports.
The 32 Dutch shops will remain open for the time being, but it will be a anxious wait to see what the search for a solution brings. However, the appointed trustee is hopeful: “The dynamic is often that interested parties revisit a bankruptcy. I hope they will approach me again, and that it can lead to a relaunch”, FD quotes him.
Scotch & Soda was founded in Amsterdam in 1980 and started as a menswear brand. Its acquisition by Sun Capital opened the doors to global expansion. However, this cost a lot of money, and in recent years the bottom line has been increasingly red.
(This article was updated at 15:20 to reflect the fact that while the foreign stores are not directly part of the bankruptcy claim, they are regarded as “dependent” on the Dutch branch and therefore need a new owner.)