* First step toward court-ordered restructuring
* Coincides with official start of French winter sales
By Dominique Vidalon and Marine Pennetier
PARIS, Jan 8 Books-to-music retailer Virgin
Megastore France will formally declare itself insolvent on
Wednesday, the latest casualty of an industry-wide slump in CD
and DVD sales as consumers download more film and music online.
The filing, the first step towards a possible court-ordered
company restructuring in France, coincides with the start of
winter clearance sales in a morose economic climate.
Shoppers are reining in spending in the euro zone's
second-biggest economy where the total number of people out of
work is at a 15-year high.
Virgin Megastore France, which employs 1,000 people, met
staff representatives on Monday and Tuesday. Laurent Parquet, a
representative of majority-owner private equity firm Butler
Capital Partners, also attended the meetings.
"The company is in a situation of payment suspension and
management said it could not let this continue," Virgin
Megastore France said on Tuesday. "This filing for insolvency
will thus take place from tomorrow."
The commerce court will decide whether the firm, which
operates 26 Virgin-branded stores in France, including a
flagship operation on the Champs-Elysees in Paris, can be
restructured or should be closed down.
The group, which has annual sales of nearly 300 million
euros ($392 million), has been loss-making for the past four
years. It has blamed its problems on rental costs in
high-profile city centre locations, falling CD and DVD sales and
a recent drop in book sales.
Laurent Parquet said: "Virgin has been going through
difficult times 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".
Guy Olharan, a representative for the CGT union said he was
still hoping a buyer could be found. After meeting culture
minister Aurelie Filipetti, Olharan said: "We hope the French
government will actively engage itself on our side". Workers
will protest in front of the Champs-Elysees store on Wednesday.
Butler Capital Partners bought a majority stake in Virgin
Megastore France in 2007 from media-to-aerospace group Lagardere
which itself bought the chain from founder Richard
Branson in 2001.
($1 = 0.7654 euro)
(Reporting by Dominique Vidalon; Additional reporting Marine
Pennetier; Editing by Dan Lalor)