German fashion house Escada has said that it will file for insolvency later this week if a crucial part of its financial restructuring program is not successful.
The retailer said that it will have to file for insolvency if its bond exchange offer fails to reach an 80% acceptance rate.
The tender period for the bond exchange of €200m (£171.9m) expires today at 3pm European Standard Time. The offer has already been extended, but Escada said that it is not possible to extend it further given the group’s imminent illiquidity.
The results of the offer are set to be unveiled on Wednesday and the retailer will meet tomorrow to determine what steps to take if the restructuring fails.
Bondholders are being given €400 (£344) and 10 Escada shares per €1,000 (£860) of debt. The restructuring is needed to set up future credit lines and allow the planned capital increase to go through.
By mid-July, the bond offer had reached an acceptance rate of 37%, according to Escada. The company is required to inform investors once it has reached 50% acceptance.
In early July, Escada revealed that talks had taken place with insolvency experts in a bid to stave off insolvency. Chairman Bruno Saelzer told a German newspaper that the group had enough liquidity to last until August but not beyond.