PARIS — Regional Galeries Lafayette stores have been given a reprieve.
The commercial court of Bordeaux has approved a plan to save the 26 Galeries Lafayette stores owned by French businessman Michel Ohayon‘s Hermione People & Brands.
Under the plan, Ohayon will see 70 percent of the 28 million euros of debt owed to its main creditor, Galeries Lafayette Group, waived. The remaining 30 percent is to be paid back over the next 10 years.
Ohayon owns the stores under Hermione People & Brands, a subsidiary of his real estate and hotel conglomerate Financière Immobilière Bordelaise, or FIB Group. HPB was placed under the court safeguard procedure, which froze its debts, in February 2023.
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In 2018, FIB’s retail arm Hermione People & Brands bought 22 stores from Galeries Lafayette Group. It later purchased three additional stores and an outlet in 2021, following Galeries Lafayette Group’s decision to push further into the franchise model.
Ohayon’s Galeries Lafayette chain is a separate business entity from the flagship Paris department store, and the stores are mostly located in small- to medium-sized cities such as Besançon, La Rochelle, Toulon and Tours, as well as Cannes.
In his filings, Ohayon said the 26 stores generate more than 200 million euros in turnover. The stores will stay operational, protecting about 1,000 jobs.
Galeries Lafayette Group still directly operates 19 stores in France, and has been increasingly expanding abroad with outposts elsewhere, including Beijing, Chongqing, Shanghai and Shenzhen in China; Doha, Qatar; Jakarta, Indonesia; Dubai; Luxembourg, and Macao. The company plans to open two locations in India later this year, with a 90,000-square-foot store in Mumbai and a 65,000-square-foot outpost in New Delhi.
It also offloaded its two BHV department stores, in Paris’ Marias and the city of Versailles, last year.
Property and hotel mogul Ohayon previously owned a handful of high street stores, including Camaïeu, Go Sport and Grand Récré, as well as Gap in the country, as he bet big on the return of the high street and tried to build a retail empire.
Under HPB, he acquired women’s casualwear chain Camaïeu in 2020, followed by Gap and Go Sport in 2021. Camaïeu was liquidated in 2022, resulting in the closure of more than 500 stores across France and the loss of some 2,600 jobs, while Ohayon sold off the other brands after his big bet on the resurgence of retail following the pandemic failed to pan out.
Separately, Ohayon is under investigation by France’s National Jurisdiction for the Fight against Organized Crime bureau for embezzlement, fraud and money laundering stemming from financial dealings across his retail brands, as well as his now-shuttered private education centers, Campus Academy, which offered higher education diplomas that were not recognized by the state.
The investigation is centered on the transfer of funds between subsidiaries, including Gap and Go Sport, among other alleged financial improprieties.
Ohayon’s hotel property business remains under court protection, after also agreeing to a recovery plan with the Bordeaux court on Feb. 28. Under subsidiaries, FIB owns the Grand Hôtel de Bordeaux, operated by the InterContinental Group, the Trianon Palace in Versailles, operated under the Hilton Group’s Waldorf Astoria label, and the Sheraton at Paris’ Charles de Gaulle airport.
FIB took out a series of loans from the Bank of China to the tune of 201 million euros between 2014 and 2017, which have not been paid back. The bank asked the courts to liquidate the hotel business to recoup the debts, but the court has given Ohayon four years to settle the liabilities. The Bank of China said it opposed the ruling, but has not yet filed an appeal.