Parkson Retail subsidiary files application for voluntary bankruptcy

By Marisa Wong

Los Angeles, April 27 – Parkson Retail Asia Ltd. announced that indirectly wholly owned subsidiary Parkson Vietnam Co. Ltd. will on April 28 file an application to the People’s Court of Ho Chi Minh City, Vietnam for the commencement of voluntary bankruptcy proceedings, according to a notice.

Parkson Vietnam operates the group’s remaining store in Vietnam. The subsidiary has historically been operating at a loss, with those losses being compounded in recent years due to the challenging business environment as a result of the Covid-19 pandemic.

In particular, the lack of support from Parkson Vietnam’s landlord (such as the negligible rental rebate or rental reduction) during the Covid-19 lockdown, when the operation of stores was restricted, had adversely impacted the company’s financials. The high land tax imposed by the local government had also added to the company’s financial difficulties.

Consequently, the group has determined that it is not commercially feasible to continue its operations in Vietnam, and the board of directors of Parkson Vietnam has determined that it will be in the best interests of Parkson Vietnam to file the application.

This is in line with the group’s focus on its operations in Malaysia, where the group remains optimistic about the overall market prospects with improving consumer sentiments and the increasing numbers of foreign tourists.

The application is, however, subject to the approval from the relevant authorities in Vietnam.

The parent company noted it will only be able to determine the exact financial impact of the voluntary bankruptcy of Parkson Vietnam on the consolidated net tangible assets per share and earnings per share of the group for the current financial year ending Dec. 31, 2023 upon the grant of the application.

Under Vietnam law, the liabilities of Parkson Vietnam will remain with and be limited to Parkson Vietnam and do not extend to Parkson Retail Asia, Parkson Retail Asia’s other subsidiaries or its holding companies.

The group’s maximum potential exposure resulting from the voluntary bankruptcy of Parkson Vietnam will therefore be limited to its capital contribution in Parkson Vietnam. Apart from the foregoing, the parent company had recognized full impairment loss on its capital contribution in Parkson Vietnam in its audited financial statements.

Going forward, the group will continue to enhance its operating efficiencies and cost improvement strategies, as well as identifying new sites with potential for opening new outlets in Malaysia.

The company said it will make further announcements as and when there are any material developments.

Parkson Retail Asia is a Singapore-based investment holding company and, together with its subsidiaries, a Southeast Asian department store retailer.

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