Cavaliere stores insolvent under the burden of debt

Romanian Distribution Group, with turnover worth around 8.5m euros and 20 stores under Cavaliere men's apparel brand, entered insolvency proceedings late last year, under the pressure of lenders it owes approximately 6m euros.
"For the time being, the preliminary list of debts has been presented and the final list of creditors will be finalised in March. There are debts of around 25m RON (6m euros), to banks (50% of the total) and to suppliers," Mihaela Murariu, manager associate with Elva Cont SPRL, the legal administrator in charge with the internal reorganisation of Cavaliere network, told ZF.
Sophore Investments, the company that had money from the rental of some commercial spaces to recoup, was the first to request, in the first half of 2009, the launch of insolvency proceedings for Romanian Distribution Group. Subsequently, though the lender got its money, as the company's representatives state, other firms joined the group of creditors, including the banks the retailer had taken out loans from for network expansion.
"The crisis fallout pushed sales down by around 50%, while contractual obligations from rents, denominated in euros, rose as a result of the RON depreciation," says Mihaela Murariu, explaining the factors that prompted Cavaliere's insolvency.
The company is controlled by Monica and Nicolae Toader Caluda (with a 65% stake) and Italian Deli Priscoli Pirolamo (35%).
The shareholder tried to restructure the business as early as mid-2009, cutting the number of employees by 25% and closing six stores in cities such as Galati, Ploiesti or Brasov.
However, as cost cuts had no major impact, the shareholder decided to being on internal reorganisation.
Insolvency allows the company to sell the stocks it has left without having to pay maturing debt.
The company has invested over 2m euros in development in the past two years, largely from banking loans, but has for this year built a much more cautious expansion plan.