France’s Virgin Megastore has confirmed it will formally ask a court to declare it insolvent on Wednesday.
That follows the collapse of sales of CDs and DVDs, in the face of internet downloads.
After members of the works council met with management on Tuesday to discuss how Virgin might be saved, a union representative blamed the bosses for its demise saying not enough had been invested in the company to make it viable.
Sylvain Alias with the SUD union told reporters: “Virgin has been declared bankrupt because of digital downloads, but there’s been management neglect, which the courts will address, because you know that Virgin has not been paying the rent on its shops for months and months.”
The group – which now has 26 stores and 1,000 employees – was sold by Virgin’s founder Richard Branson over a decade ago and is 80 percent owned by French investment firm Butler Capital Partners.
They bought that stake in 2007, when sales were still strong.
From 2008 to 2011 turnover fell from 400 million euros to 286 million.
Butler Capital Partners spokesman, Laurent Parquet, said: “As you know, Virgin has been going through difficulties for a long time. We have invested a lot in this company, we tried to straighten out the company’s accounts. Now our concern is to find the best possible solution.”
It will be up to the court to decide if the company can be reorganised, or will have to be closed down.
But survival does not look likely, given the decision last week to terminate the lease on its flagship store on the Champs-Elysées in Paris, which has been generating 20 percent of its turnover.