Galeries Lafayette: a new reprieve for the 26 stores owned by Michel Ohayon
What: The 26 Galeries Lafayette stores owned by Michel Ohayon have received a crucial endorsement for their business continuity plan from the Galeries Lafayette group, their main creditor, ensuring a new lease on life for these establishments.
Why it is important: This development is a significant turning point in the ongoing financial saga involving the 26 branches, which had been facing uncertainty since filing for a protection procedure in February 2023. The Galeries Lafayette group's acceptance of the revised recovery plan not only prevents potential closures and job losses but also demonstrates a commitment to supporting the retail sector's stability, especially in medium-sized French towns.
In a pivotal moment for the retail industry, the 26 Galeries Lafayette branches owned by Bordeaux businessman Michel Ohayon have been granted a reprieve. The stores, which had been under financial strain and entered a protection procedure in early 2023, received crucial support from their main creditor, the Galeries Lafayette group. The group has agreed to a modified recovery plan proposed by Ohayon, which includes a significant concession on the debt owed by Ohayon, amounting to several tens of millions of euros.
Under the terms of the revised plan, Galeries Lafayette will waive 70% of their credit claims, with the remaining 30% to be repaid over a decade. Additionally, there will be a reassessment of the commission rate in two years, and the revenue growth forecast for the stores has been adjusted from an unrealistic 11% to a more feasible 4%. This agreement has garnered support from creditors and court-appointed representatives, marking a positive step towards the stores' financial stability and the preservation of approximately 1,000 jobs.
The decision by Galeries Lafayette to support the recovery plan highlights the group's recognition of the challenging circumstances faced by the stores and its willingness to contribute to a viable solution. The Bordeaux trade court is set to make a final ruling on the revised continuity plan on March 20, offering hope for a sustainable future for these Galeries Lafayette branches.
