Parkson files for bankruptcy for its Vietnam subsidiary

(Source: Bigstock)

Parkson Vietnam, an indirect wholly-owned subsidiary of Parkson Retail Asia, has filed for voluntary bankruptcy with the City People’s Court in Ho Chi Minh City after 18 years in the market. 

The company cited a long history of operational losses in the market and lack of support from landlords during the Covid-19 outbreak as the primary factors in its collapse. 

The parent company, Parkson Retail Asia, said that declaring bankruptcy is the best course of action since continuing operations in Vietnam is not economically feasible.

“The high land tax imposed by the local government had also added to Parkson Vietnam’s financial difficulties,” Tan Sri William Cheng, executive chairman of Parkson Retail Asia, said in a statement about the bankruptcy application to the Singapore Stock Exchange, where Parkson Retail’s shares are listed.

“As such, the group has assessed and 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.” 

Cheng further said that this is consistent with the group’s focus on its operations in Malaysia, where the group remains confident about the overall market prospects due to better consumer behaviours and an increase in international tourists.

While the application is subject to approval by the relevant Vietnamese authorities, under Vietnamese law, Parkson Vietnam’s obligations are limited to that company and do not involve the parent company or any other group subsidiaries. 

Last year, Parkson’s Vietnam operation recorded a loss of S$2.3 million (US$1.7 million).

Parkson Vietnam, which has only one place of business remaining in Ho Chi Minh City, once had shopping malls spread around the country and was regarded as a luxury retail destination in Vietnam.

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