The Hong Kong-listed group says seven of its businesses in Germany cannot pay their bills and it is “unviable financially to continue the business as it is currently structured in Germany”.
Esprit has filed for insolvency “under self-administration” for seven of its subsidiaries in Düsseldorf, Germany.
Esprit Holdings is present in more than 40 countries and has one of its two headquarters in Germany, (the other one is in Hong Kong) where the insolvency proceedings concern the Esprit Europe GmbH, and six other German subsidiaries.
The group said in a statement that it is “unviable financially to continue the business as it is currently structured in Germany”. High rent, high costs of labour and energy prices as well as “the after-effects of the coronavirus pandemic and the consequences of international conflicts”, had weakened the European subsidiaries’ finances, it added.
The statement warned that more European businesses could be affected, as two of the currently affected German businesses are also shareholders in other Esprit Holdings companies in France, the UK and Poland, as well as others, which cold potentially be subject to a similar insolvency procedure in the future.
Esprit has already filed for bankruptcy in Belgium and Switzerland in March, according to Reuters.
Are shops closing in Europe?
No announcement about shop closures has been made so far.
The business operation is to continue until further notice but, ultimately, the jobs of some 1,500 employees will be directly affected by the insolvency.
Meanwhile, the management of each subsidiary is working on restructuring plans and the group is exploring new funding opportunities, adding that: “Various potential investors have expressed their interest for strategic partnership.”
Reuters has reported that a financial investor is already at an advanced stage of talks on the acquisition of the brand rights for Europe.
Esprit has not responded to Euronews Business’ request for comment.