German fashion company Escada AG filed
bankruptcy in Germany, according to The Wall Street Journal. The company
was unable to find the financing it needed and was forced to file to protect assets.
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.
In the first half of its fiscal year ending in April, the company lost 92 million Euros. The Escada Group employs 2300 people all over the world in its shops and boutiques.
German fashion company Escada AG 
