Lee Cooper shareholders: Insolvency was the only legal way

The main creditors of LCR Jeans, which owns the licence for Lee Cooper stores and filed for insolvency in December 2009, are freight suppliers, the bank and leasing companies, according to the company's management. However, mall owners say the company also owes them hundreds of thousands of euros.

"Freight suppliers, the bank and leasing firms financed the company's development in previous years, by granting investment contracts on medium periods of time and this is why they are now the main creditors," Ronen Haliva, LCR Jeans shareholder, told ZF, without disclosing the value of accumulated debt as "the list of creditors has not been finalised".

The retailer reported total debts of 5.3m euros and inventories of 2.2m euros in late 2008 to the Finance Ministry.

The company's insolvency also hurts the shopping centres the retailer has withdrawn its stores from, leaving behind debts of several hundred thousand euros to malls, according to developers.

Lee Cooper shareholders say, though, that debts to malls amount to only several thousand euros.

"LCR Jeans debts to Vitantis shopping centre, including the rent for several months, marketing and utilities expenses, stand at around 40,000 euros. The company hasn't paid its rent since the summer of 2009. In late 2009 they tried to renegotiate rents, we proposed a turnover-type rent that could have meant a cut of around 70% from the basis rent for LCR Jeans, but they didn't sign anything, they preferred to close the shop," stated Vlad Dragoescu, investment manager with the firm that manages the properties of Equest investment fund that owns Vitantis.

Several shopping centre developers are in a similar situation.

The main factor that prompted the decision to file for insolvency was, though, the very high losses half of Lee Cooper stores had been registering for more than a year, according to Haliva. " (...) Filing for insolvency was the only legal way and the only way we could secure protection against creditors, which did not like the idea of Lee Cooper closing the store in their centre, but were not willing to understand the period we were going through, either (...)," Haliva explains.