Galeries Lafayette franchises saved by debt deal

What: A court has approved a debt relief plan for 26 regional Galeries Lafayette stores owned by Michel Ohayon, saving them from closure.

Why it is important: This decision prevents the potential loss of 1,000 jobs and maintains the presence of Galeries Lafayette in small- to medium-sized cities across France. It also reflects broader challenges in the retail sector, including the shift towards franchising and the financial pressures exacerbated by the pandemic.

Michel Ohayon's 26 regional Galeries Lafayette stores have secured a financial lifeline after the Bordeaux commercial court approved a plan to clear 70% of the subsidiary Hermione People & Brands' 28 million euros debt to its main creditor, Galeries Lafayette Group. The remaining debt will be repaid over ten years, ensuring the stores remain operational and preserving around 1,000 jobs. These developments come as Ohayon's retail empire faced setbacks, including the liquidation of the Camaïeu chain and the sale of other brands. Additionally, Ohayon is under investigation for financial irregularities related to his retail and private education ventures. This court decision marks a crucial step in stabilizing part of France's retail landscape amidst broader industry challenges.