The two main bidders for Christian Lacroix, including a member of the Ajman royal family, could not show a Paris court they have the money to finance the deal.
Lacroix bids come up short
ABU DHABI // The two main bidders for Christian Lacroix, including a member of the Ajman royal family, could not show a Paris court they have the financing to back up their offers for the troubled French fashion house, throwing its future into jeopardy. A hearing on Tuesday to consider options for the company was adjourned because neither Sheikh Hassan bin Ali Al Nuaimi nor Bernard Krief Consulting could demonstrate they had enough funding. The bidders have until December 1 to justify their case to the French tribunal, said Leon Falic, the president of the US company which owns Lacroix.
"If Sheikh Hassan comes through, he is the preferred choice," Mr Falic said. "If he doesn't come through, then Krief will get the bid. If they don't come through, then there's a continuation plan." Sheikh Hassan, a nephew of Sheikh Humaid bin Rashid, the Ruler of Ajman, could not be reached for comment yesterday. Vincent de Mauny, the managing director of distribution for Bernard Krief who worked on the Christian Lacroix bid, said on Tuesday the firm had the funds to make the deal.
"We wouldn't propose something that we couldn't afford," he said. "And we have presented guarantees to the court justifying that we can afford this." Regis Valliot, the court-appointed administrator of Lacroix, said neither bidder could prove they had enough liquidity. "The time to make the decision is useful for the bidders to justify their money," Mr Valliot said. "If not, it will be the continuation plan of the shareholders and 100 people fired."
Under such a plan, Lacroix's liabilities would be paid within 10 years, Mr Valliot told Bloomberg News. The fashion house would cease operations and sell its licence to allow a buyer to produce under its name. The licence for haute couture would be free, while the ready-to-wear line for women would be "not free, but not expensive at all", he said. He could not be reached yesterday for a further explanation on the pricing structure. Lacroix, while a famous brand, has never made a profit since it was founded in 1987 by Bernard Arnault, then the chief executive of the luxury firm LVMH. The Falic Group bought the label in 2005. After steep losses in the wake of the economic downturn, it filed for bankruptcy in May this year.
Krief submitted a ?100 million (Dh546.8m) bid in July, of which ?12m was an investment by Midex Airlines, a cargo carrier based in Abu Dhabi, said Mr de Mauny. The deal would keep the haute couture and ready-to-wear lines and retain all staff, he said. Sheikh Hassan formally submitted his bid to the Paris tribunal on October 8, an offer which would also avoid job cuts and preserve both the haute couture and ready-to-wear divisions.
Mr Valliot has said the Sheikh Hassan bid was the best option because of his plan to extend the brand to yachts and luxury homes. Both bidders will have the opportunity to present notices from their banks to prove the financial viability of their plans on December 1, Mr Valliot told Bloomberg. Though Mr Falic is still hopeful for the Sheikh Hassan bid to succeed, his group is examining other options as a backup plan.
"If he can come through within the next week, then he can buy it," he said. @Email:email@example.com * with agencies