Bankruptcy For Virgin France Music Store, Says Insolvency Company IVAOnline.co.uk
The struggle by High Street music stores to stay afloat has claimed another victim as Virgin France has filed for bankruptcy with £18m of debts, says debt management company IVAOnline.co.uk.
Feb. 19, 2013 - PRLog -- The large music store, which is owned by French Investment firm Butler Capital, employs more than 1,000 people in 26 stores across France. It has been struggling for many years against the rapid growth of discounted CDs and DVDs being sold by supermarkets, as well as the rise in music and film downloads through the Internet.
It’s flagship store, which occupies a prime retail position on the Champs Elysees, is investigating its lease termination options while alternatives are still being considered by the Paris Commercial Court about whether to try a recovery plan or put the firm into liquidation. However finding a competitive niche for a high street music store when up against internet giants like Amazon and iTunes may be tough.
Laurence Parisot, head of the French employers' union MEDEF, said "It's absolutely terrible news. The crisis we are going through is not just an economic one … it's a new model that is coming to life and many sectors are affected."
The French media company Lagardere purchased the chain from Richard Branson in 2001, and subsequently sold an 80% share to Butler capital in 2007 while retaining a 20% share. Over the last two years, the company has closed several shops and made 200 staff redundant in an effort to streamline the operations and turn the business round. In 2009 the last of the Virgin Megastores stores were closed in the UK. A new management board was appointed in 2012, and claims it may take another two years to restructure the company to make it a viable profitable enterprise.
Virgin France is not alone.
It’s rival on the high street, Fnac, has also had its problems and announced the loss of 300 jobs in France and a further 200 planned throughout the rest of its global operations. It discontinued its digital download service Fnacmusic after it failed to rival some of the bigger digital download companies in the market. It’s owners, the PPR Group, have been trying to sell the store for the last three years.
A spokesperson for the Individual Voluntary Arrangement provider, IVA Online, said of the bankruptcy: “Virgin France joins a worryingly long list of book, music, film and games retailer that have gone to the wall, which in the UK includes Zavvi, Our Price, Tower Records, Border’s, Andy’s, Blockbuster and Music Zone. The fact that sales of high street CDs and DVDs continue to decline as people use new digital download services means that remaining high street retailers are going to have to work very hard to remain competitive and avoid bankruptcy.”