Romanian Distribution Group, with turnover worth around 8.5meuros and 20 stores under Cavaliere men's apparel brand, enteredinsolvency proceedings late last year, under the pressure oflenders it owes approximately 6m euros.
"For the time being, the preliminary list of debts has beenpresented and the final list of creditors will be finalised inMarch. There are debts of around 25m RON (6m euros), to banks (50%of the total) and to suppliers," Mihaela Murariu, manager associatewith Elva Cont SPRL, the legal administrator in charge with theinternal reorganisation of Cavaliere network, told ZF.
Sophore Investments, the company that had money from the rental ofsome commercial spaces to recoup, was the first to request, in thefirst half of 2009, the launch of insolvency proceedings forRomanian Distribution Group. Subsequently, though the lender gotits money, as the company's representatives state, other firmsjoined the group of creditors, including the banks the retailer hadtaken out loans from for network expansion.
"The crisis fallout pushed sales down by around 50%, whilecontractual obligations from rents, denominated in euros, rose as aresult of the RON depreciation," says Mihaela Murariu, explainingthe factors that prompted Cavaliere's insolvency.
The company is controlled by Monica and Nicolae Toader Caluda (witha 65% stake) and Italian Deli Priscoli Pirolamo (35%).
The shareholder tried to restructure the business as early asmid-2009, cutting the number of employees by 25% and closing sixstores in cities such as Galati, Ploiesti or Brasov.
However, as cost cuts had no major impact, the shareholder decidedto being on internal reorganisation.
Insolvency allows the company to sell the stocks it has leftwithout having to pay maturing debt.
The company has invested over 2m euros in development in the pasttwo years, largely from banking loans, but has for this year builta much more cautious expansion plan.
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