I. Basic information

? ? ? ? In 2022, the Russia-Ukraine conflict pushed up global energy prices, and the Federal Reserve’s interest rate increase strengthened the return of the dollar. Multiple factors led to high inflation in the euro area. In order to curb inflation, the European Central Bank has raised interest rates sharply since July 2022, resulting in the tightening of market funds and inhibiting real economic activities. Many European enterprises have suffered multiple shocks, triggering a wave of bankruptcy. According to the preliminary statistics of Fujian Branch of China Export and Credit Insurance Corporation (hereinafter referred to as Fujian Branch of China Export and Credit Insurance Corporation), European buyers accounted for about 80% of the buyer bankruptcy cases accepted in 2022, mainly involving clothing, handicrafts, electromechanical and other industries.

? ? ? ? Since this year, although the global epidemic has eased and international trade has gradually increased, the risk of bankruptcy in Europe has not stopped. Recently, in addition to receiving a series of bankruptcy cases from American buyers, China Sinosure Fujian Branch also received several loss reporting cases against the same French sporting goods company (Groupe Go Sport). At present, the reported loss amount has exceeded 1.2 million US dollars, involving many export enterprises in Quanzhou and Fuzhou. According to the verification of overseas channels of China Sinosure,Groupe Go Sport has applied for bankruptcy proceedings on January 19, 2023, and has opened the bankruptcy creditor’s rights registration channel. The deadline for bankruptcy creditor’s rights registration is May 19, 2023.

? ? ? ? Groupe Go Sport, founded in the 1980s, is a French national sporting goods brand with more than 2000 employees. At the end of 2021, Groupe Go Sport was acquired by HPB Group with a symbolic price of 1 euro, but its operating conditions did not improve. According to the notice of the Grenoble Commercial Court on January 19, 2023, the liabilities of Groupe Go Sport have exceeded 10 million euros and are in the state of bankruptcy administration, and the judicial takeover is carried out in accordance with the relevant bankruptcy laws of France. The judicial department has appointed two administrators and two judicial representatives to conduct a six-month observation and carry out relevant investigations on “misuse of company assets”. According to Agence France-Presse, investigators believe that there are two suspicious accounts of Groupe Go Sport cash flow, with a total of more than 50 million euros. The first tranche of nearly 18 million euros is suspected to be used by HPB Group to pay the salaries of employees of Cama ? eu, another brand of the former bankrupt group. The second tranche of about 36 million euros is suspected to be used to finance HPB Group’s acquisition of 21 GAP stores.

II. Analysis of bankruptcy background

? ? ? ? It is observed that the French clothing industry is currently in an unprecedented predicament. Although during the epidemic in 2020, the French government helped brands maintain their loans through the National Guaranteed Loan Facility (PGE) for a period of time, the loan repayment period has gradually reached, and more and more brands must seek new financing. According to the European Times and other reports, many brands that could not obtain financing in time have experienced a large number of layoffs or bankruptcy, such as Cama ? eu (another subsidiary of HPB Group) has been liquidated, Cop. Copine has implemented a large number of layoffs, Pimkie is about to be sold, Kooka ? announced bankruptcy and reorganization, C& A Close its two stores.

? ? ? ? The reason why the French clothing industry is in trouble is closely related to the overall macroeconomic environment in Europe since last year. According to S&P Global statistics, the comprehensive PMI of the euro zone in November 2022 was 47.8. Among them, the manufacturing PMI was 47.3, which was lower than the boom and bust line for five consecutive months; The PMI of the service industry was 48.6, falling for four consecutive months. New orders fell sharply for the fifth consecutive month, and customer demand remained weak. The reduction of new orders means that enterprises rely on the existing backlog of business to maintain the level of business activities. The backlog of orders has declined for the fifth consecutive month, the fastest rate in two years. In the long run, the outlook for economic activity in the euro area is still not optimistic due to the impact of the downturn in consumption.

III. Relevant risk suggestions

? ? ? ? （1） It is recommended that relevant export enterprises register their claims as soon as possible to avoid missing the registration deadline (see above) and strive for the possibility of impairment; Enterprises that have taken out export credit insurance shall timely report losses according to the policy agreement and submit relevant loss reporting materials.

? ? ? ? （2） For goods in transit or in transit, if the export enterprise can control the right of goods, it is suggested to take active measures to reduce the loss of goods; If the original buyer still has the intention to receive the goods, it must obtain the written consent of the bankruptcy administrator in advance; Before disposing of goods, enterprises that have taken out export credit insurance shall submit an application for cargo handling scheme to China Sinosure in advance.

? ? ? ? （3） It is recommended that export enterprises pay close attention to the operation of other brands of HPB Group, control the transaction scale, and make full use of export credit insurance to assess risks in advance.

? ? ? ? （4） Export enterprises can continuously track the credit status of cooperative buyers with the help of Sinosure’s buyer credit investigation service, so as to “know yourself and know the other”, and focus on the restructuring background of buyers who have had equity restructuring events.

? ? ? ? Special reminder:The current international trade situation is still complex and severe. While seizing orders, export enterprises still need to pay close attention to macroeconomic changes. They should not only “see and hear from all sides”, keep an eye on the operation dynamics of the buyer (including the parent company of the group), but also “fasten the safety belt in advance”, and make good use of the risk protection function of export credit insurance, so as to avoid a huge impact on the operation of export enterprises due to the sudden bankruptcy risk of the buyer.

Article source：China Sinosure Fujian Branch