Computer Retailer Files for Bankruptcy

Associated Press

July 15, 1996

FRANKFURT, GERMANY FRANKFURT, Germany (AP) _ German computer retailer Escom AG said Monday it was filing for bankruptcy, a victim of ambitious expansion coupled with slumping demand for personal computers.

Escom has been in insolvency proceedings since July 2 after forecasting a 180 million mark ($118 million) loss for 1995 and continued ``substantial losses'' in the first half of 1996.

A court-appointed administrator decided Escom wouldn't be able to raise enough capital to stay afloat through restructuring talks, the company said.

The bankruptcy doesn't mean the company is going out of business and it still could enlist investors to restructure the company.

Escom has blamed weak demand in its main markets for its troubles. Escom has 460 outlets in Europe, mostly in Germany, Britain and the Netherlands. Others are in France, Poland, the Czech Republic, Austria, Hungary and Slovakia.

German electronics giant Siemens AG holds a 10 percent share in Escom and German mail-order group Quelle has 25 percent.

Escom, founded in 1986 by German entrepreneur Manfred Schmitt, started to slide soon after buying the British store chain Rumbelow's in 1995. Schmitt resigned last March as losses mounted.

The company said after filing for insolvency it would cut 1,900 of its 4,400 employees this year.