The owner of the Gianfranco Ferre fashion label, which also produces Juts Cavalli, Versace Sport and Galliano products, may be forced to file for bankruptcy protection, as the global economic crisis hits the Italian clothing industry.
AFP - The Milan-based owner of the Gianfranco Ferre fashion label said Monday it may be forced to file for bankruptcy protection as the global financial crisis tears up the Italian clothing industry.
IT Holding, which also has licences to produce Juts Cavalli, Versace Sport and Galliano products, said on Monday that its Ittierre division would file for bankruptcy after running out of cash to pay royalties on the brands.
"It is very probable" that a demand for bankruptcy protection will be made for the group as a whole and not just its subsidiary, said a company spokesman who pointed to obligations to holders of the company's debt.
Italy's stock exchange suspended trading in IT Holding shares on Monday.
The group is to take advantage of an Italian law allowing companies with more than 1,000 employees and more than 1 billion euros of debt to be placed under emergency administration.
This status offers protection from creditors, allowing a company time to restructure and trade its way out of difficulty.
The company's woes are only the latest troubles to hit Italy's fashion sector, which is under pressure because of lower demand among cash-strapped consumers as well as harder access to credit in the crisis.
In December, fashion and textile associations representing tens of thousands of small companies and union leaders called for an "urgent" meeting with Prime Minister Silvio Berlusconi to discuss ways to limit the impact of the crisis.
The crisis has had wider repercussions in the global fashion sector as a whole, with smaller designers forced to stay away from some of the haute couture shows for spring-summer 2009 and high-profile brands cutting costs.
"It would be inconceivable to stage a show when my main worry is to be able to pay staff their salaries," French designer Anne Valerie Hash said last month ahead of Paris Fashion Week, which was shortened this year because of no-shows.
Even iconic French label Chanel has said it is taking "prudent measures," including cutting staff travel costs, hiring on a temporary basis and halting a world tour of a mobile art exhibition inspired by the Chanel quilted handbag.
In a filing to Italy's stock exchange, Ittierre said the decision to file for bankruptcy protection was made in light of "the absence of the conditions necessary to continue its operations in a regular course of business."
The statement referred to problems with "the availability of the necessary financial resources" and said the company had taken its decision "to allow the group to be restructured and to continue its business operations."
IT Holding, which employs around 1,800 people and had sales of 637 million euros in 2007, has to pay off debts of around 300 million euros (389 million dollars). Ittierre makes up around 60 percent of the company's revenues.
Date created : 2009-02-09