22 Billion Euros in Debt But No Purchaser for Virgin Megastore

Virgin Megastore on the Champs Élysée Photo: Christopher Woods, wikimedia commons

Virgin Megastore on the Champs Élysée
Photo: Christopher Woods, wikimedia commons

960 employees of the entertainment retail chain may face unemployment as the Commercial Court of Paris rejected new offers made to take over the French branch of Virgin Megastore.

The brand was originally created by British tycoon Sir Richard Branson in 1970 as a record label, before the first French store opened on the Champs Elysées in 1988. But during the past few years, Virgin, like other distributors, suffered from declining sales of DVDs, records, and books, as well as from competition with high-volume operators like Amazon and Apple.

In January 2013, the French company, unable to cover its debts with its available assets, faced liabilities of 22 billion euros. A judicially imposed reorganization procedure opened with a period of surveillance fixed to four months – a period during which business activity is monitored to assess the economic situation of the company in order to create a recovery plan in the interests of improving or selling the business. If recovery is impossible, the court pronounces the liquidation of the business, a judicial procedure that puts an end to the company activity and liquidates assets to pay off its creditors.

On June 10, the court refused bids from the Vivart group, a collection of apparel companies, and from Cultura, a retailer. Cultura’s offer concerned two stores, which would have saved 52 jobs, while Vivart’s offer was for about 10 stores and approximately 173 jobs, according to La Tribune. The labor union rejected the offers.

The more promising bid was made by Rougier & Plé for 11 stores, among 26 in total. Hope for the employees quickly disappeared as the offer was withdrawn on May 17. “That is the worst that could happen,” said Loic Delacourt, representative of the labor union to La Tribune.

Major shareholder Lagardère – a media group – offered to redeploy 80 employees. The principal shareholder, Butler Capital Partners, agreed to pay 2 billion euros in an effort to protect those threatened with unemployment. That said, many workers are still likely to lose their jobs.

Since Tuesday, many disgruntled employees have occupied the premises. “We are here to have a future, get what we asked for months, a proper social plan,” said employee Frédéric Lebissonnais to the Agence France-Presse (AFP). They are asking for 15 billion euros in compensation, but the plan is currently fixed at 8 billion.

On June 17, the Commercial Court of Paris decided on the liquidation of Virgin.

Trackbacks

  1. […] 960 employees of the entertainment retail chain may face unemployment as the Commercial Court of Paris rejected new offers made to take over the French branch of Virgin Megastore. In January 2013, the French branch, unable to cover its debts with its available assets, faced liabilities of 22 billion euros. The court refused bids from the Vivart group, a collection of apparel companies, and from Cultura, a retailer, and decided on the liquidation of Virgin. […]

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