Escada Files For Bankruptcy

August 14 | Posted by Lira | Fashion News Tags: , , ,

Escada Spring 2008 Ad Campaign.preview

There will be around 2300 employees of the fashion house, Escada, who may not get to enjoy a very merry Christmas come winter. Their employer, the German fashion company, has just filed for bankruptcy according to The Wall Street Journal. The company has moved to file following a failure in finding financing. In order to protect its assets, filing was the next best solution.

The report from Wall Street Journal states:

“The Munich-based luxury label, famous for women’s fashion and accessories, was expected to make the filing this week after it failed to get the necessary support for a bond swap. Escada, once one of the biggest fashion brands in the world, has seen its sales and earnings decline in recent years.

The company had hoped to reduce debt by offering bondholders a new bond in exchange, made up of two parts plus a cash component. Taken together, the new bond would have carried a total nominal value of €400 ($568) in exchange for every €1,000 in nominal value of the old bond. Escada said a number of restructuring measures, including a plan to raise €30 million through its bigger investors and a credit extension of more than €13 million, had been contingent on the bond swap, but it didn’t get enough support from the bondholders. The minimum acceptance ratio was 80% of bondholders.

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.”

During the last quarter, Escada lost about 92M Euros.

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