The company Luxury Brand Management (LBM), which operates boutiques with luxury fashion and accessories, belonging to the portfolio of companies of the entrepreneur Zdeněk Bakala, has applied for a three-month protective moratorium against creditors. This is due to a lack of funds to cover liabilities related to the forced closure of stores due to the coronavirus pandemic. The Municipal Court in Prague granted the request. This follows from the information published in the insolvency register. The E15 server notified the request for protection from creditors today.
LBM derives most of its sales from retail sales. However, the shops are closed from December 27. The company is thus unable to pay its liabilities, at least until the stores reopen, the moratorium stated in the justification for the announcement. Throughout the closure, the company pays wages to all employees and also pays rent.
“If the situation does not change in the foreseeable future, LBM will exhaust all the financial reserves it has created in previous years and will be faced with the decision of how to proceed with the business,” Zuzana Řezníčková, the company’s CEO, told the E15 server. She added that LBM was considering extending the moratorium application for half a year if the retail ban still applied.
According to the information in the form for declaring a moratorium, the company employs 54 people. According to the financial statements for 2019, revenues reached CZK 599.4 million, but a total loss of CZK 67.6 million. According to the information in the annual report, it was mainly caused by costs associated with the optimization of the brand portfolio and the overall restructuring of the company. In 2018, the loss was about 94 million crowns.
Due to the pandemic, clothing and footwear retailers are most affected among the shops. In February, according to the Czech Statistical Office, their sales fell by 69 percent year on year. The crisis has put several established brands in trouble. In January, the Municipal Court in Prague approved a proposal to reorganize the Blažek men’s fashion store network, and in February opened insolvency proceedings with Pietro Filipi. The leather company Kara Trutnov belonging to the C2H group of the entrepreneur Michal Mička, as well as Pietro Filipi, also went into insolvency.
Source: CTK, E15 and LBM
