UPDATE 1-Future of La Redoute in doubt after unions reject deal

Fri Mar 21, 2014 1:35pm EDT

* Unions reject restructuring deal on compensation dispute

* Management says now has to ask court to intervene

* One possibility now would be a court-ordered restructuring (Recasts with La Redoute statement, adds details)

By Dominique Vidalon

LILLE, France, March 21 (Reuters) - The future of France's loss-making mail order business La Redoute hung in the balance on Friday after its main unions rejected a restructuring deal and management said it had no other option than asking the courts to intervene.

In December, parent luxury group Kering reached a deal to sell the business for a symbolic 1 euro ($1.38) to La Redoute's chief executive Nathalie Balla and Eric Courteille, chief administrative officer of Redcats, La Redoute's immediate parent.

Closing the deal, however, hinged on unions approving the terms of the restructuring plan, in particular severance packages.

The CGT union said earlier that neither it nor the two other unions, the CFDT and Sud, had agreed to back the proposals by the Friday 1300 GMT deadline set by La Redoute's management.

"The management of La Redoute regrets the dead end that La Redoute is in," La Redoute said in a statement.

"In the absence of a deal on the social plan and in anticipation that Kering will stop funding La Redoute's operations, management must inform the Lille commercial court of the financial difficulties facing the business," the company said. It said this procedure would enable it to assess where its options now stand.

Mario Califano, a lawyer for La Redoute staff, said that one possibility was that La Redoute might be placed under court-ordered restructuring. Under this procedure, the court decides to name an administrator who will look at ways to secure the company's future or eventually decide to liquidate it.

Kering had no immediate comment on the unions' decision.

La Redoute, which sells a wide range of products, from furniture and bed sheets to clothing and sex toys, has been fighting to stem a decline in sales, hit by fierce competition from specialist and discount internet retailers despite its own move online.

La Redoute is the last retail business Kering, formerly PPR, needs to sell to complete its transformation into a group focused on luxury and sports goods brands, a process which started in 2006 with the disposal of retailer Printemps.

La Redoute, which employs around 3,400 staff, including 2,400 in France, announced in January that 1,178 jobs would be cut within the next four years under its restructuring plan, including 700 forced departures.

Kering, which has already injected 400 million euros into La Redoute since 2008, has agreed to put in another 520 million euros to cover its losses and finance its restructuring, provided the unions approve the plan.

The dispute with unions mainly centered on severance packages. La Redoute Management had offered a minimum compensation for voluntary departures of 20,000 euros when unions were asking for 40,000 euros.

($1 = 0.7255 Euros) (Reporting by Pierre Savary and Dominique Vidalon; Editing by Lionel Laurent, Natalie Huet and Andrew Callus)