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Scotch and Soda has filed for bankruptcy for its Dutch operations after a structural cash flow deficit led to a “failure to absorb the negative effects of corona and high inflation”, despite record revenues last year.
In a statement published on its Linkedin page, the clothing brand said the courts of Amsterdam and Haarlem have now declared the bankruptcy of all Dutch entities of the group.
The group said the move “does not affect the entities outside of the Netherlands”, however.
It added that “all efforts are aimed at enabling the company to continue its activities in the Netherlands and in its Dutch stores” while the bankruptcy trustee looks for a permanent solution that “benefits all stakeholders”.
In the meantime, the group’s 32 stores in 21 cities in the Netherlands will remain open as usual “for the foreseeable future”.
In its statement, the group said: “This decision to file for bankruptcy became unavoidable following a chain of events that accelerated severe cash flow issues.
“Although Scotch and Soda outcompeted the market with record revenues of €342.5m (£300m) in FY 21/22, the Covid crisis affected its business performance and financial health negatively for two years, with the last lockdown in the Netherlands in December 21/January 2022 particularly damaging its financial recovery from the pandemic. As a matter of fact, the company’s last earnings of €20m (£17.m) were lower than they could have been without the pandemic related measures in its home market at that time.”
It added: “This was then followed by the large drop in consumer confidence due to the war in Ukraine, the resulting energy crisis and the high inflation rates that followed. This again contributed to severe cash flow issues with which the company has been struggling since June last year and which required ongoing support from its lenders and shareholder.
“Unfortunately, the current shareholder and lenders of the company were unable to help it any further and time was too short to complete the sale of the company as a financially solvent entity to a new shareholder. The board deeply regrets that this situation has arisen. It will support the bankruptcy trustee in his efforts to set up a successful sale process to preserve the Scotch and Soda brand in The Netherlands and safeguard the jobs of its employees where possible.”
