The hard-hit sports chain responds to SGI Europe’s questions following recent reports that the company has stopped paying its supplier invoices.
Several suppliers to XXL are now reporting that the chain now has stopped paying invoices to suppliers, according to the Norwegian business website E24. Suppliers have also noticed that XXL, which has a new majority owner in British Frasers Group, is not placing any new orders. According to E24, the only thing XXL is paying right now is staff salaries and electric bills, to keep stores open.
Has the decision to suspend payments been ordered by Frasers?
SGI Europe has gotten in touch with XXL’s Communications Director, Jan Christian Thommesen, and asked how the company is doing and whether the reports of its insolvency is true.
“Yes, it is demanding, there is no doubt about that,” Thommesen said. “We have not confirmed this with suppliers, but it comes from individual sources. We will not deny or confirm this at this stage. We only have one message to share at this time, but we will get back to you as soon as we know more.”
On the question of what is happening now, Thommesen said: “XXL’s liquidity situation remains challenging. In parallel with our work on the overall financing solution, we are implementing several measures to manage liquidity. We are in dialogue with our largest shareholder regarding possible liquidity and operational support. These discussions are closely linked to an ongoing dialogue with our banks on how they can also contribute to a long-term and sustainable solution. The banks’ cooperation in this process is crucial.”
For its article E24 spoke with attorney Willy Dalheim, co-owner of a law firm called Kyrre, who has extensive experience in business and bankruptcy law and believes the decision to suspend payments indicates an imminent risk of bankruptcy. “When you don’t pay what you owe, it’s because you have no money,” Damheim said. “You can’t avoid paying what you owe.”
The decision to suspend payments, then, would seem to have emanated from new owner Frasers Group, which is conducting due diligence on all of XXL’s operations. As reported before, Frasers Group voted at the annual general meeting not to remunerate senior executives, grant bonuses to board members or approve the annual accounts and annual report. The reason was that the decisions should be postponed until the due diligence process is complete.
SGI Europe has sent further questions to Fraser’s Group and will report on XXL’s future as we receive more information.
