Sun European's V&D goes under

José Rojo
05 January 2016

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Dutch department store chain V&D, owned by turnaround specialist Sun European Partners since 2010, has been declared bankrupt by an Amsterdam court nine months after a last attempt to keep the business afloat.

Made public on 31 December 2015, the court's decision marks the end of Sun's five-year tenure as V&D's majority shareholder.

A replacement for the GP is being sought by the company's administrators; according to V&D, "dozens" of suitors have already expressed their interest to purchase parts of the asset.

According to reports in the Dutch press, V&D's stores and La Place restaurants will continue to operate after the bankruptcy announcement. The fate of the chain's 10,000-strong workforce remains uncertain but the employees will receive their January wages via state-wide jobs centre UWV.

A source familiar with the situation explained to unquote" that Sun felt it could no longer support V&D financially. The firm is believed to have injected a total of €200m into the retailer over the last five years to help keep it afloat.

Sun's first investment took place in November 2010, when it drew equity from its $6bn fifth buyout fund to buy a majority stake in V&D from sellers KKR, Cinven, Alpinvest and Permira. At the time, the GP counted on the company's "strong brand and market position" in the Netherlands and stated it would back its growth via new facilities and private-label merchandising.

In February 2015, as V&D continued to battle liquidity woes, Sun deployed a further €60m into the retailer to help it face rent commitments to landlords. At the time, the company was successful in negotiating more lenient renting terms.

In addition, Sun took on the €40m debt supplied by lenders ING, ABN Amro and Rabobank during the 2010 buyout – the move provided the banks with a way out of the distressed business, unquote" understands.

Put together, the measures failed to turn things around for V&D for the remainder of 2015. The situation was compounded by an unfavourable market environment for Dutch retailers, with warm winter temperatures holding back sales.

The court-ordered bankruptcy of a private-equity-backed company is the latest in the Netherlands, a country where private equity houses have come under mounting public scrutiny around portfolio companies.

One of the most recent to make headlines was childcare centre operator Estro Group, bought by HIG Capital after struggling under previous owner Providence Equity Partners.

Along with other high-profile portfolio company difficulties, the case sparked policymaker unease and led to an announcement by the Dutch Labour party that it would move against "easy-money-focused" private equity with a 12-measure green paper.