Fashion firm Kookai declares bankruptcy

LONDON - Fashion chain Kookai became the latest casualty on high street on Tuesday after it formally declared bankruptcy and appointed accountancy firm Deloitte as administrators to seek a buyer.

The future of the once high-flying fashion chain hung in the balance after debt-laden Forminster, the UK franchise holder for the brand, failed to renegotiate contract terms with Kookai's Paris-based parent company just before Christmas.

"The administrators are carrying out a rapid review of the business, and in the meantime the business continues to trade whilst a buyer for some or all of the business as a going concern is found," Deloitte said in a statement.

The news follows the bankruptcies in Britain of DVD and CD retailer MVC and wine retailer Unwins, in growing signs of the impact on retailers of a consumer spending slowdown and rising fixed costs.

Kookai trades from 25 British stores and 30 concessions and employs 600 people in the UK. It operates under the Kookai SA brand in France.

"Various parties are already interested. We're looking for a rapid sale and want to have the process concluded within weeks," Deloitte partner Neville Kahn said.

He said information would be sent to prospective buyers in days and that any buyer would need to reach an agreement with Kookai SA, in France, which licenses the brand in the UK and has agreed to let it continue to operate under the Kookai name until a buyer is found.

Suspended

Trading in Forminster shares was suspended at the company's request on December 22 after it failed to reach an agreement with Kookai SA parent company Groupe Vivarte over brand licensing.

Shares in Forminster, listed on the London Stock Exchange's AIM market, were suspended at 3.75 pence in December, after tumbling more than 20 per cent because of doubts about its future. At the end of November the group warned that its trading position from January 1 was "highly uncertain".

"Kookai is a very strong retail brand. For some time there has been uncertainty over the franchise arrangements with Kookai SA, and this administration enables more stability to be brought into the business," Kahn said in the Deloitte statement.

Kahn added by telephone that Vivarte, which is owned by the European private-equity group PAI, is not on the list of those who have expressed an interest in taking over and running Kookai's UK operations. It does, however, continue to own the branding rights.

The bankruptcy is the latest to hit the UK high street, which is suffering under weak consumer spending.

MVC, with 700 staff at about 70 stores and annual turnover of more than 100 million pounds, filed for bankruptcy on December 21 and hired Kroll as administrators.

Alcoholic drinks retailer Unwins collapsed just days earlier after its main creditor, HBOS, appointed KPMG as administrator.

The seller of wine, beer and spirits, which has around 380 stores and a history dating back to 1843, has set a deadline of 5:00 p.m. on Tuesday for bids for its remaining 170 outlets, according to a KPMG spokeswoman.

- REUTERS