Virgin Megastore France faces insolvency The owner of France's chain of 26 Virgin Megastores is planning to declare itself insolvent next week after cancelling the lease on its flagship Champs-Elysées site, one of the biggest retail operations on the famous Paris shopping street. The private equity-owned Virgin Megastore France, which employs about 1,000 people in the country, has been lossmaking for several years as shoppers have opted in increasing numbers to buy their music and films online. Like other chains, such as the UK's HMV and France's Fnac, it is struggling to afford the rents in its shops and has also suffered a recent steep decline in book sales. Britain's chain of Virgin stores disappeared from the high street in 2008, a year after they were sold by Sir Richard Branson, the billionaire investor. Sir Richard sold the French chain in 2001 to Lagardère, the French media company, which sold it on in 2008 to Butler Capital Partners, a private equity firm. Virgin Megastore France said it would hold a works council meeting on Monday to declare its insolvency officially and discuss last-ditch measures to avoid closure. The process involves filing to suspend payments, the first step towards a court-ordered company restructuring in France. The company had sales of €286m in 2011, while its net debt is about €22m. It closed several shops last year and cut staff, while a new management team appointed in the summer said it would take another two years to restructure the business by reducing retail space and beefing up its internet presence. But the decision in December to end the lease on the Champs-Elysées site, which contributes 20 per cent of sales, was a sign of its difficulties. Shop workers have taken strike action on the Champs-Elysées over the Christmas period to protest against the closure, which they blame in part on a lack of investment in recent years. "We've been expecting this since last spring," said Sylvain Alias, a union official for Virgin workers. The group can't pay the social charges on salaries, or its shop rents, or its suppliers. Britain's HMV warned last month that it was facing a "probable covenant breach at the end of January 2013" and blamed poor sales in the run-up to the Christmas trading period. PPR, the French luxury group, is exploring a spin-off of Virgin's rival Fnac because of a dearth of buyers for the books and music store chain, where sales and profits have tumbled in recent years in the face of online competition.