Iconic French chain Galeries Lafayette in financial trouble

A total of 26 Galeries Lafayette stores across France – all franchises owned by businessman Michel Ohayon – have been placed under ‘protection’ by a court in Bordeaux, at the request of Mr Ohayon.

The procedure was set up to maintain activity and jobs, and also to ensure the payment of debts.

In an interview with the newspaper Sud Ouest, Mr Ohayon announced that he was going to "place [my] Galeries Lafayette [stores] into receivership to protect them from any attack”.

However, the next morning he 'corrected' this statement via Agence France Presse (AFP).

He said: "There has been a mistake…There was no placement into receivership because a request for the placement into a safeguard procedure was filed Friday morning [February 17] with the commercial court of Bordeaux.

"There will be no suspension of payments."

Galeries Lafayette stores, of which Mr Ohayon owns 26, have been at the heart of the French commercial centres but also high streets for decades.

Mr Ohayon bought 22 of the shops in 2018, in Agen, Amiens, Angoulême, Bayonne, Beauvais, Belfort, Besançon, Caen, Cannes, Chalon-sur-Saône, Chambéry, Dax, La Roche-sur-Yon, La Rochelle, Libourne, Lorient, Montauban, Niort, Rouen, Saintes, Tarbes, and Toulon. In 2021, he bought three more: in Pau, Tours, and Rosny-sous-Bois. He also has an outlet store, in a shopping centre near Calais.

But for several months, employees have been worried. Frédéric Hacquart, CFDT central delegate, told France 3: "In all the stores, the employees are under pressure. They are being asked to keep quiet, they are being told that everything is fine. How can we say that everything is fine when nothing is paid, when neither VAT nor social charges are being paid?"

It comes after the rest of the entrepreneur's business empire has been in turmoil in recent months.

Go Sport was placed into receivership last January, and Camaïeu was liquidated last September.

Read more: 2,600 jobs lost as French clothing group Camaïeu in administration

Last week, the Bordeaux commercial court placed Mr Ohayon’s main holding company, Financière Immobilière Bordelaise (FIB), into receivership.

FIB is a vast commercial and hotel empire, including the Hermione People & Brands umbrella (HPB) which includes Galeries Lafayette, Go Sport, Gap France, and Cafés Legal.

It employs 5,000 people in total.

In an interview with AFP, Mr Ohayon responded to criticism of his actions. He said: "I have heard everything being said about me but…[I have injected] 2.5 times more” [money into the company than promised].

“I have tried everything to save jobs”, he said. There are a reported 2,000 jobs across his group.

Mr Ohayon said that FIB being placed in receivership should allow the company "to continue its activity" and "prepare the best conditions for the repayment of creditors and companies".

What is a ‘safeguard procedure’?

A safeguard procedure is intended for companies experiencing difficulty, but which have not yet stopped paying their bills.

The aim is to make it easier to reorganise the company, and enable it to maintain its economic activity, keep people’s jobs, and to ensure the settlement of its debts.

The safeguard procedure generally ends with the implementation of a safeguard plan.

High street issues throughout France

Financial problems have hit the high street elsewhere in France, too.

A total of 163 San Marina stores closed their doors for good last Saturday evening (February 18), after having been put into receivership last September.

In the absence of a credible buyer, the commercial court of Marseille had been set to place the well-known brand into judicial liquidation on Monday (February 20), but the management did not wait for the court’s decision to announce the chain’s closure.

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