Escada burned through €200M in bonds — then bondholders refused to save it

Escada was founded in Munich in 1976 by Margaretha and Wolfgang Ley, growing into one of Germany's best-known luxury fashion houses. By the 2000s, Escada had expanded into fragrances and accessories, operating globally with a reputation for opulent women's ready-to-wear. But the company had financed its growth through debt, and by 2008 it carried roughly €200 million in outstanding bonds that were coming due.

In 2008, CEO Bruno Sälzer took over and sold Escada's subsidiary Primera AG (which owned mid-range brands Laurèl, apriori, cavita, and BiBA) to raise cash. He launched a debt restructuring plan that included a €29 million ($41 million) rights issue and a bond exchange offer. The exchange offer required approval from 80% of bondholders to succeed — and it fell short.

On August 11, 2009, Escada filed for insolvency at Munich Local Court. The immediate cause was clear: without the bond exchange, the company could not meet its obligations. In November 2009, billionaire Lakshmi Mittal acquired Escada out of insolvency for roughly €80 million ($118 million), installing his daughter-in-law Megha Mittal as owner and chair. The company continued operating under the Escada name, but the founding family's legacy was gone.