Escada Files For Bankruptcy

Escada Files for Court Protection in Germany
By THE ASSOCIATED PRESS
August 14, 2009

FRANKFURT (AP) — The German fashion company Escada has filed for bankruptcy after being unable to obtain financing, a Munich district court said Thursday.

The filing was expected after the company, famous for women’s fashion and accessories, failed to get the necessary support for an earlier bond swap.

Escada was once one of the biggest fashion brands in the world, but its popularity, sales and earnings have declined.

The company said a number of restructuring measures had been contingent on the bond swap working, but it did not get enough support from the bondholders.

For example, a plan to raise 30 million euros, or $42 million, through the company’s bigger investors had been contingent on the bond exchange going through, as was a credit extension of more than 13 million euros. A successful swap would have also given the company some immediate liquidity to help it eliminate some of its debt.

The company said earlier this week that the situation was “regrettable,” but that it still hoped for a turnaround in its finances and business.

The company had sales of 528 million euros in fiscal year 2008, but reported a net loss of 70 million euros. In the first half of the fiscal year ending in April, it lost 92 million euros.

Escada operates 182 of its own shops and 225 franchise shops in more than 60 countries, employing about 2,300, 600 of those in Germany.

(SOURCE: NYTimes.com)