UK High Court invalidates sale of 15.9% stake

Chinese conglomerate Shandong Ruyi, formerly the owner of fashion group SMCP, went bankrupt in 2021. In the aftermath, several creditors, with debt administration specialist GLAS as trustee, seized a stake of nearly 30% in SMCP, the group that owns Sandro, Maje, Claudie Pierlot and Fursac, with the subsequently stated aim of selling off their shares. But the operation has resulted in a complex financial tangle. Shandong Ruyi, via its European subsidiary European TopSoho, still held an 8% stake in SMCP, while another 15.9% was transferred to Dynamic Treasure Group, a company based in the British Virgin Islands and registered to the daughter of Shandong Ruyi’s founder.

On 12 July 2024, the UK High Court declared invalid the 2021 sale of European TopSoho’s 15.9% stake in SMCP to Dynamic Treasure Group. A ruling that came in response to an appeal filed by GLAS, which has been upheld by the court. GLAS is acting as trustee for five of the group’s creditors: BlackRock, Carlyle, Anchorage, Boussard and Gavaudan. According to French business daily Les Echos, the creditors are planning to acquire the stake in question in order to have better leverage on the group’s capital in future.

In a statement, SMCP has said that an injunction “is expected to be issued soon by the court, demanding the restitution of the 15.9% stake by Dynamic Treasure Group to European TopSoho, currently being liquidated in Luxembourg.”

A new chapter in this financial saga is therefore set to unfold in the coming months. Earlier in the year, SMCP, which is listed on the Paris Stock Exchange, unveiled an action plan designed to revitalise the business and improve profitability. The plan involves downsizing the group’s Chinese operations, entering the Indian market, and reviewing all SMCP’s existing contracts, notably for rent and sourcing.

In Q1 2024, SMCP, which operates over  1,700 stores worldwide, recorded a 5% decrease in global revenue compared to the previous year, down to €287 million. In the period, revenue was down in Asia-Pacific (by 15.7%) and in France (by 7.4%), but it was buoyant in America, where it grew by 8.9%.