BHV Marais seeks court protection, blaming €37.5m it says Brookfield owes

BHV Marais has filed for judicial reorganization, the court-protection procedure that lets a French company restructure while it keeps trading. The filing comes less than five months after chief executive Karl-Stéphane Cottendin acquired the business with three other executives, bringing a recovery plan with them.

Cottendin presents the move as a strategic step rather than an admission of distress. "Judicial reorganization is a technical framework: it is a strategic step in the restructuring plan, a considered decision that forms part of the life and recovery of the company," he said in a statement.

He added that "BHV is 170 years old; it has weathered many other storms, and it will weather this one." The store will remain open and its management team will keep leading the recovery plan as the crucial holiday season looms.

The immediate cause is cash flow. "What this store lacks today is the cash flow it is owed," Cottendin said, arguing that "every week counts" and that the retailer has "everything it needs to succeed." The news was first reported by Le Figaro.

The dispute with Brookfield

At the centre is 37.5 million euros that Cottendin says is owed in compensation for returning more than half the store's premises to Brookfield. The Canadian investment firm bought the BHV building in January from its former owners, Galeries Lafayette.

The returned areas were rumoured to be slated for conversion into luxury apartments. Cottendin maintains the recovery plan depends partly on the compensation, and says the payments have not been made.

Brookfield disputes the claim. It says nothing is currently owed to BHV, and that any payment was conditional on the premises being returned in the required condition. The two sides therefore disagree on whether a debt exists at all.

BHV says the missing funds stopped it carrying out planned investments, including stock replenishment, renovations and an overall commercial relaunch. The store had already endured waves of bad press and months of empty shelves.

Looting on the ground floor during the unrest in central Paris on 17 October strained the cash position further, the company added. Management says the squeeze made it increasingly difficult to fund the turnaround while also addressing existing liabilities.

The divergent positions have intensified tensions between retailer and landlord, leaving the funding of Cottendin's recovery plan uncertain. Management expects the procedure to give a framework for pre-existing debts, to enforce agreements with the landlord and to attract investment.

A turbulent year for the store

Under former owners Groupe Société des Grands Magasins, BHV opened the first permanent French store of Chinese ultra-fast-fashion retailer Shein last November. That prompted protests, the departure of several brands and the end of its partnership with Galeries Lafayette Group.

The retailer was sold in June to its management team, which then ended the Shein partnership. Shein will fully exit the premises by the end of December.

The new owners have sought to reposition BHV as a place for everyday shopping for the neighbourhood around its historic location, with a stronger focus on homewares and traditional strengths. The ground floor has reopened and around 40 brands have returned.

More brands were expected by year-end, with a Grand Marché du Marais food court also due to move in. Pop-up stores are scheduled to open from November, according to the company.

Cottendin vowed to continue "this fight to revive the store" under the protection of the courts. He called the fundamentals solid and pointed to a plan with "a commercial strategy, an offering, and teams working tirelessly to make this project succeed."

A separate hearing is scheduled for 30 October at the Paris Commercial Court, following concerns raised by the labour inspectorate about the company's solvency. Management disputes those concerns and says it intends to present a continuation plan to the court after an observation period.

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Image: Courtesy of Galeries Lafayette